Sanctions and Anti-Money Laundering Bill [Lords]

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 1st May 2018 Commons Chamber

Consideration of Bill, as amended in the Public Bill Committee.

[Mr Speaker]

Before we begin with Government new clause 3, I want to refer to the procedure for this debate. As the House will know, I have decided not to use my discretion to select the late starred new clauses and amendments from the Government, which were tabled yesterday afternoon and which appeared in print for the first time only this morning.

New Clause 3

Periodic reports on exercise of power to make regulations under section 1

“(1) The Secretary of State must as soon as reasonably practicable after the end of each reporting period lay before Parliament a report which—

(a) specifies the regulations under section 1, if any, that were made in that reporting period,

(b) identifies which, if any, of those regulations—

(i) stated a relevant human rights purpose, or

(ii) amended or revoked regulations stating such a purpose,

(c) specifies any recommendations which in that reporting period were made by a Parliamentary Committee in connection with a relevant independent review, and

(d) includes a copy of any response to those recommendations which was made by the government to that Committee in that reporting period.

(2) Nothing in subsection (1)(d) requires a report under this section to contain anything the disclosure of which may, in the opinion of the Secretary of State, damage national security or international relations.

(3) For the purposes of this section the following are reporting periods—

(a) the period of 12 months beginning with the day on which this Act is passed (“the first reporting period”), and

(b) each period of 12 months that ends with an anniversary of the date when the first reporting period ends.

(4) For the purposes of this section—

(a) regulations “state” a purpose if the purpose is stated under section 1(3) in the regulations;

(b) a purpose is a “relevant human rights purpose” if, in the opinion of the Secretary of State, carrying out that purpose would provide accountability for or be a deterrent to gross violations of human rights.

(5) In this section—

“the government” means the government of the United Kingdom;

“gross violation of human rights” has the meaning given by section 1(6A);

a “Parliamentary Committee” means a committee of the House of Commons or a committee of the House of Lords or a joint committee of both Houses;

a “relevant independent review”, in relation to a Parliamentary Committee, means a consideration by that Committee of whether the power to make regulations under section 1 should be exercised in connection with a gross violation of human rights.”—(Sir Alan Duncan.)

This new clause requires periodic reports to be made about the use of the power to make sanctions regulations. A report must identify regulations relating to gross human rights violations. It must also specify any recommendations made by a Parliamentary Committee for use of that power in relation to such violations, and include the government’s response.

Brought up, and read the First time.

13:36

[The Minister for Europe and the Americas (Sir Alan Duncan)]

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this it will be convenient to discuss the following:

New clause 1—Scottish Limited Partnerships: partner requirement—

“(1) For the purposes of preventing money laundering, where a limited partnership registered in Scotland has general partners at least one of those must be a British citizen.

(2) Where a limited partnership registered in Scotland has limited partners at least one of those must be a British citizen.

(3) In this section—

a “limited partnership registered in Scotland” means a partnership registered under the Limited Partnerships Act 1907;

“British citizen” has the meaning given in part 1 of the British Nationality Act 1981.

“general partner” has the meaning given in section 4(2) of the Limited Partnership Act 1907;

“limited partner” has the meaning given in section 4(2A) of the Limited Partnership Act 1907”.

New clause 6—Public registers of beneficial ownership of companies registered in British Overseas Territories—

“(1) For the purposes of the detection, investigation or prevention of money laundering, the Secretary of State must provide all reasonable assistance to the governments of the British Overseas Territories to enable each of those governments to establish a publicly accessible register of the beneficial ownership of companies registered in each government’s jurisdiction.

(2) The Secretary of State must, no later than 31 December 2020, prepare a draft Order in Council requiring the government of any British Overseas Territory that has not introduced a publicly accessible register of the beneficial ownership of companies within its jurisdiction to do so.

(3) The draft Order in Council under subsection (2) must set out the form that the register must take.

(4) If an Order in Council contains requirements of a kind mentioned in subsection (2)—

(a) it must be laid before Parliament after being made, and

(b) if not approved by a resolution of each House of Parliament before the end of 28 days beginning with the day on which it is made, it ceases to have effect at the end of that period (but without that affecting the power to make a new Order under this section).

(5) In calculating a period of 28 days for the purposes of subsection (4), no account is to be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days.

(6) For the purposes of this section, “British Overseas Territories” means a territory listed in Schedule 6 of the British Nationality Act 1981.

(7) For the purposes of this section, “a publicly accessible register of the beneficial ownership of companies” means a register which, in the opinion of the Secretary of State, provides information broadly equivalent to that available in accordance with the provisions of Part 21A of the Companies Act 2006.”

This new clause would require the Secretary of State to take steps to provide that British Overseas Territories establish publicly accessible registers of the beneficial ownership of companies.

New clause 14—Public registers of beneficial ownership of companies in the Crown Dependencies—

“(1) For the purpose of preventing money laundering, the Secretary of State must provide all reasonable assistance to the governments of the Crown Dependencies to enable each of those governments to establish a publicly accessible register of the beneficial ownership of companies registered in that government’s jurisdiction.

(2) The Secretary of State must, by the deadline set for the implementation of the European Union’s 5th Anti-Money Laundering Directive, prepare a draft Order in Council requiring the government of any Crown Dependency that has not introduced a publicly accessible register of beneficial ownership of companies within their jurisdiction to do so.

(3) The draft Order in Council under subsection (2)—

(a) must be laid before Parliament after being made, and

(b) if not approved by a resolution of each House of Parliament before the end of the 28 days beginning with the day on which it is made, ceases to have effect at the end of that period (but without that affecting the power to make a new Order).

(4) In calculating a period of 28 days for the purposes of subsection (4), no account is to be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.

(5) For the purposes of this section, a “publicly accessible register of beneficial ownership of companies” means a register which, in the opinion of the Secretary of State, provides information broadly equivalent to that available in accordance with the provisions of Part 21A of the Companies Act 2006 (information about people with significant control).

(6) For the purposes of this section, “Crown Dependency” means—

(a) any of the Channel Islands;

(b) the Isle of Man.”

New clause 19—Scottish Limited Partnerships: UK bank account requirement—

“(1) For the purposes of preventing money laundering, where a limited partnership registered in Scotland has general partners at least one of those must have an active UK bank account.

(2) Where a limited partnership registered in Scotland has limited partners at least one of those must have an active UK bank account.

(3) In this section—

a “limited partnership registered in Scotland” means a partnership registered under the Limited Partnerships Act 1907;

“general partner” has the meaning given in section 4(2) of the Limited Partnership Act 1907;

“limited partner” has the meaning given in section 4(2A) of the Limited Partnership Act 1907.”

Government amendments 10 to 12.

Amendment 32, in clause 1, page 2, line 17, at end insert—

“(i) further accountability for, or act as a deterrent to, the commission of a gross human rights abuse or violation.”

This amendment would enable sanctions to be made for the purpose of preventing, or in response to, a gross human rights abuse or violation.

Amendment 33, page 2, line 35, at end insert—

“(5A) In this section, conduct constitutes “the commission of a gross human rights abuse or violation” if each of the following three conditions is met.

(5B) The first condition is that—

(a) the conduct constitutes the torture of a person who has sought—

(i) to expose illegal activity carried out by a public official or a person acting in an official capacity, or

(ii) to obtain, exercise, defend or promote human rights and fundamental freedoms, or

(b) the conduct otherwise involves the cruel, inhuman or degrading treatment or punishment of such a person.

(5C) The second condition is that the conduct is carried out in consequence of that person having sought to do anything falling within subsection (2)(a)(i) or (ii).

(5D) The third condition is that the conduct is carried out—

(a) by a public official, or a person acting in an official capacity, in the performance or purported performance of his or her official duties, or

(b) by a person not falling within paragraph (a) at the instigation or with the consent or acquiescence—

(i) of a public official, or

(ii) of a person acting in an official capacity, who in instigating the conduct, or in consenting to or acquiescing in it, is acting in the performance or purported performance of his or her official duties.

(5E) Conduct that involves the intentional infliction of severe pain or suffering on another person is conduct that constitutes torture for the purposes of subsection (2)(a).

(5F) It is immaterial whether the pain or suffering is physical or mental and whether it is caused by an act or omission”.

This amendment, which is consequential on Amendment 32, would define what constitutes the commission of a gross human rights abuse or violation. The commission of a gross human rights abuse or violation would include the torture of a person who had sought to expose the illegal activity of a public official, or the torture of a person who had sought to defend human rights or fundamental freedoms, by a public official or a person acting in an official capacity.

Government amendments 13 to 17.

Amendment 20, in clause 56, page 43, line 7, after first “1”, insert

“, section (Public registers of beneficial ownership of companies registered in British Overseas Territories)”.

This amendment is consequential on NC6.

Government amendment 18.

Amendment 31, in title, line 5 after “objectives”, insert

“or to further accountability for, or act as a deterrent to, the commission of a gross human rights abuse or violation”.

This amendment to the long title would be consequential on Amendment 32.

[Sir Alan Duncan]

This group contains new clauses and amendments regarding three related issues that I will discuss in turn: imposing sanctions for gross human rights violations, or what is now popularly known as the Magnitsky amendment; Scottish limited partnerships, which are of deep concern, particularly for the Scottish National party; and public registers of beneficial ownership in the overseas territories. In two of those areas, the Government are taking action to tackle abuses and tighten up standards: through Government amendments on Magnitsky and through a consultation document on Scottish limited partnerships.

[Alison Thewliss (Glasgow Central) (SNP)]

Will the Minister give way on that point?

[Sir Alan Duncan]

It is a bit early, but I will do so if the hon. Lady insists; I am ever obliging to the hon. Lady.

[Alison Thewliss]

The Minister mentions the consultation on SLPs. Does he not accept that there has already been a consultation on SLPs and that it closed over a year ago, so to have another consultation is just wasting time?

[Sir Alan Duncan]

If I might say so ever so politely to the hon. Lady, she is jumping the gun slightly given that I am only at the end of my first paragraph, and as she knows there have been some detailed discussions through the usual channels. I will address the matter she has asked about in more detail later on; if I may, I will tackle the three issues to which I have referred in the order that I raised them, in order to satisfy the House that we are looking at all concerns in detail and genuinely.

First, sanctions for gross human rights violations have clearly been an issue of significant concern to Members on both sides of the House, as was made clear by many who spoke on Second Reading and in Committee. I fully recognise why Members and many people outside this House want to include gross human rights abuses in the Bill explicitly as a reason why sanctions can be applied, particularly in reference to the abhorrent case of Sergei Magnitsky in Russia.

In her speech to the House on 14 March, the Prime Minister made clear the Government’s intention to bring forward a Magnitsky amendment to the Bill, and as the House can see we have fulfilled that obligation by doing so for discussion in the House today. As a result of that commitment, we have worked closely, constructively and genuinely with Members on both sides of the House, including some who have campaigned for this amendment at great length, particularly my right hon. Friends the Members for Newbury (Richard Benyon) and for Sutton Coldfield (Mr Mitchell). I also genuinely thank the hon. Member for Bishop Auckland (Helen Goodman), my opposite number, and the hon. Member for Oxford East (Anneliese Dodds). Together we have worked to put together a form of words that now enjoys cross-party support. We have tabled amendments that we hope will capture the maximum possible consensus in this area.

[Chris Bryant (Rhondda) (Lab)]

I am truly grateful for everything that the Minister and all those he has referred to have done in relation to the Sergei Magnitsky amendment. It is obviously important that he has captured the consensus of the House, but it is even more important that we capture all those, in particular those from Russia, who have come to this country and used it for money laundering purposes and for hiding their assets. Is he confident that we will be able to do that as a result of this legislation?

[Sir Alan Duncan]

I am confident of that, as I will explain further in a moment.

As is traditional on Report, it is important that I explain what the amendments do, if ever so briefly. Amendment 10 relates specifically to putting gross human rights abuses on the face of the Bill as a basis on which sanctions may be imposed. Amendments 11, 12, 14, 15, 16 and 17 are consequential to that, introducing technical changes that will follow. Amendment 13 links the definition of a gross violation of human rights to the existing definition in the Proceeds of Crime Act 2002, so that it includes the torture of a person by a public official or a person in an official capacity, where the tortured person has sought to expose the illegal activity of a public official or to defend human rights or fundamental freedoms. That will ensure that all gross human rights abuses or violations are explicitly captured.

[Toby Perkins (Chesterfield) (Lab)]

The Minister will not be surprised to know that I fully support the Government in bringing this change forward, as I am sure all Labour Members do, given that we have been asking for it for some time. On the subject of sanctions, will the Government publish the names of those who have been sanctioned under the Bill, notwithstanding what subsection (2) of new clause 3 says about not risking damage to

“national security or international relations”?

[Sir Alan Duncan]

There is an obligation to report, which I will come to in a minute. I would be happy to explain the exact details to the hon. Gentleman, although of course they are still being devised on the back of the obligations laid down in the Bill.

New clause 3 requires reports to be made—this relates to the question that the hon. Gentleman has just asked—about the use of the power to make sanctions regulations, including the specifying of any recommendations made by a parliamentary Committee on the use of that power and the Government’s response. It is right and proper that an independent review of the powers should be carried out by Parliament. This is a strong set of measures to address the Government’s approach to imposing sanctions for human rights abuses, and I would like to put it on record again that the Government are committed to promoting and strengthening universal human rights and holding to account states and individuals who are responsible for the most serious violations.

[Jo Swinson (East Dunbartonshire) (LD)]

Will the Minister outline how he envisages such a parliamentary review operating? Will it be done through specific Committees, or on the Floor of the House? Will we be able to have confidence that that procedure is robust enough to ensure that the review is appropriate?

[Sir Alan Duncan]

The hon. Lady hits on a point that illustrates the important distinction between the Executive and the legislature, even though the Executive are drawn from the legislature. We, as Ministers, are the Executive. The hon. Lady is a Member of the legislature. I will not say, “Long may that continue”, but it might. It is therefore inappropriate for us to determine in primary legislation exactly how the House should go about its business. That is for the House itself to decide. We believe that we have included in the Bill the proper impetus for the House to be able to structure itself as it wishes—through the Joint Committee on Human Rights or the Foreign Affairs Committee, for example—while saying in advance that we as the Executive will have an obligation to report back and respond to any such independent activity.

[Stephen Kinnock (Aberavon) (Lab)]

Along with other colleagues, I absolutely share the objectives of the Magnitsky provisions. I have been in touch with Bill Browder, for whom Sergei Magnitsky worked at the time of his brutal murder by the Russian authorities, and Mr Browder has made it absolutely clear to me that if this does not lead to the full publication of the names of the people who are being sanctioned and to absolute clarity on the nature of the independent review that has just been mentioned, the Bill will have failed in its objectives. It is important that the Minister understands what Mr Bill Browder is saying on this matter.

[Sir Alan Duncan]

I can say that any person sanctioned under this Bill will have their name published on an administrative list, which will be publicly available. I hope that that will reassure the hon. Gentleman, the House and all those interested in this issue.

13:45

[John Penrose (Weston-super-Mare) (Con)]

I was about to ask the same question, and the answer that the Minister has just given will be enormously reassuring to many of us, particularly because the thing that many of these kleptocrats and organised criminals really fear is the glare of public disclosure.

[Sir Alan Duncan]

I hope that I will be able to continue to address the House with similar such effect this afternoon.

[Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I doubt that there is anyone in this House who does not want the overseas territories and Crown dependencies to have open, public registers of company interests. If new clause 6, tabled by my right hon. Friend the Member for Sutton Coldfield (Andrew Mitchell) does not pass, how will the House be able to have confidence that the Executive will make sufficient progress as though we had compelled them to issue Orders in Council?

[Sir Alan Duncan]

I will be saying more about the overseas territories in a moment. I fully recognise the interest that my hon. Friend has shown, over many years, in the importance of protecting the interests of the overseas territories, particularly in the Caribbean. I will be able to give him deeper reassurance on this in a moment, but if I may, I will continue with my points in the order that I was planning to make them, by addressing the Magnitsky issue first, then Scottish limited partnerships, before turning to that rather more vexed issue.

Looking at the Scottish National party Benches, I turn to the separate amendments on Magnitsky tabled by the hon. Member for Glasgow Central (Alison Thewliss). While we agree with the driving principles behind the amendments, we are satisfied that the package of amendments that we have tabled—which have been signed by Members on both Front Benches—sufficiently cover the same objectives. I hope that the hon. Lady will feel that they do. As she knows from our discussions in Committee, we have approached this entire issue in a spirit of cross-party co-operation. Indeed, she has played an important part in that in her campaigning.

[Alison Thewliss]

I should like to take this opportunity to say that, having heard what the Minister has said on this matter and others, I am content not to press my amendments relating to Magnitsky.

[Sir Alan Duncan]

I am grateful to the hon. Lady. I am hoping for a similar response on other parts of the Bill as I proceed gingerly through the new clauses and amendments that we are discussing today. I hope that, when I proceed gingerly, no one can see that I am here at all.

Opposition amendments 31 and 32 would insert a purpose into the Bill to allow sanctions regulations to be made for the purpose of preventing, or ensuring accountability for, a gross human rights abuse or violation. As the hon. Lady has already suggested, however, our amendment 10 would add a similar purpose, so I sense that we have found common ground here. Also, just to make the record clear, Opposition amendment 33 would define what constitutes a gross human rights abuse or violation on the face of the Bill. Government amendment 13 provides a similar function through reference to a definition already existing in other legislation, as I have just explained, which is preferable for maintaining a tidy statute book. I therefore hope that our amendments meet the goals of the hon. Lady’s amendments. I sense that they do.

Setting aside a technical assessment of the Bill, I think that, on Magnitsky, we have got there. This is a very important moment for the House, and for the defence of human rights that the United Kingdom is always proud to show. All parties have come together to find consensus on ensuring that the proper legislative powers are in place to address gross violations of human rights. That is a matter of deep concern to Members on both sides of the House, to many people outside and internationally. If the amendments are agreed to today, as I am sure they will be, we can truly say that we have spoken together, united in favour of human rights, and that the voice of the United Kingdom sits alongside other countries that have adopted such legislation, and we can score it as a great achievement of which we can all be proud. Once again, I pay tribute to those who have so relentlessly and persistently campaigned for it. It is not just a triumph for the House; it is a personal triumph for them. In saying that, I look once again to my right hon. Friend the Member for Newbury in particular.

Turning to Scottish limited partnerships, we recognise the concerns that have been raised, and I assure the House that the Government are committed to making further progress. SLPs and other forms of limited partnership play a vital role in the asset management sector for the funding of asset-based contribution pension schemes and for oil and gas exploration, which matters enormously to Scotland. That makes it all the more important not just that their legitimate use is supported, but that legitimate action is taken to prevent their misuse. As hon. Members will be aware, the past decade has seen a vast increase in the number of SLPs, with the growth rate far outstripping that of the number of limited partnerships established in the rest of the UK, and we recognise the concern that SLPs are being used inappropriately. Following clear evidence of certain SLPs being misused, the Government brought them within the scope of our register of beneficial ownership. Since then, the rate of new SLP registration has declined by approximately 80%, but we recognise that more needs to be done.

Yesterday, the Department for Business, Energy and Industrial Strategy published a consultation document on limited partnership reform following its call for evidence last year. The document sets out clear options for reform. The Government propose that all those registering a limited partnership would need to be registered with an anti-money laundering supervisor. They would need to carry out due diligence before establishment, with the possibility of supervisory action. That due diligence will necessarily include identifying the beneficial owners of the SLP, including its general and limited partners when they exercise control over the SLP. That addresses the substantial purpose behind new clause 19, which would require at least one of both the general and limited partners in an SLP to have an active UK bank account, and so require that they will have been subject to due diligence for anti-money laundering purposes.

Such measures would address the substantial purpose behind the new clauses on the subject. We are further consulting on how best to require limited partnerships to retain a physical presence in the UK to ensure that there is a UK link against which any necessary enforcement proceedings can be taken. Additionally, the Department for Business, Energy and Industrial Strategy is seeking views on whether all limited partnerships should be required to file an annual confirmation statement with Companies House. Taken together, the proposals would tighten the checks on SLPs, ensure that they retain a UK presence and expose more details about their workings to public scrutiny. They would not disproportionately burden limited partnerships that operate entirely lawfully, but they would go further in reducing their potential for illicit misuse.

New clause 1 would require that, where a Scottish limited partnership has general and limited partners, at least one of each must be a British citizen. That would have the unintended side effect of disrupting the legitimate uses of corporate partners within sectors, including the venture capital sector. The Government consider that the measures on which the Department for Business, Energy and Industrial Strategy is consulting will do more to bring transparency to limited partnerships and to prevent them from being misused, without damaging their legitimate usage. The Department’s consultation will be open until 23 July, and I encourage all interested Members to continue engaging with the process of reforming limited partnership structures. Given the work that the Department is leading, and the Government’s clear plan to continue reforming limited partnerships, I respectfully ask that hon. Members do not move their respective amendments in this area and that they work hard with us to ensure that we can produce an outcome with which they are fully satisfied.

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

The Minister mentioned increasing the regulation of SLPs, but a regulation from last year meant that SLPs had to register their beneficial ownership within 28 days or face a £500 daily fine. Only 43% of them have provided that information, meaning that £2.2 billion in backdated fines has accrued. When does the Minister intend to collect that money and enforce the regulations that already exist for SLPs?

[Sir Alan Duncan]

It sounds as though the hon. Gentleman is going to make a robust submission to the consultation, and I urge him to do so, because I fully take the point that if something can be required but it does not work operationally, then obviously it will not be delivered. I urge him to record what he believes are the facts and submit them to the consultation.

I express my gratitude to Members who have tirelessly continued to raise their concerns on the issue of SLPs—I can spot one from where I am standing—and I hope that what I have said today, and the content of the consultation published yesterday, provides reassurance that the Government are genuinely committed to reform in this area.

Turning to beneficial ownership in the overseas territories, as the House will now appreciate, the Government’s plan for tackling the issue had been to table a new clause, which we did, that sought unity in the House, which I believe we had a good chance of securing. The new clause sought to enhance the measures on beneficial ownership in the overseas territories but stopped short of legislating for them, thus avoiding constitutional conflict. As Members will be aware, however, some amendments were not selected today, and we of course fully respect the procedural basis on which Mr Speaker chose not to select them.

New clause 6, tabled by my right hon. Friend the Member for Sutton Coldfield and the right hon. Member for Barking (Dame Margaret Hodge), would put a duty on the Government to work with the overseas territories to set up public registers of company beneficial ownership by 31 December 2020. If they do not do so, the new clause would require the Secretary of State to prepare a draft Order in Council, aiming to legislate directly. Opposition new clause 14 would require the Secretary of State to provide all reasonable assistance to the Governments of the Crown dependencies to enable them to establish a public register of company beneficial ownership, and if, by the implementation of the European Union’s fifth anti-money laundering directive, they have not, the new clause would require the Secretary of State to take all reasonable steps to ensure that the Privy Council legislates to require each Crown dependency to do so.

The UK has strongly supported co-ordinated international action to promote beneficial ownership transparency. The UK was the first G20 country to establish a public register of company beneficial ownership and has committed to creating a new beneficial ownership register for overseas companies. At EU level, the UK went beyond the requirements of the fourth anti-money laundering directive in establishing a public register and supported the inclusion in the fifth anti-money laundering directive of a provision that will require all EU member states to have legislation in place to support publicly accessible registers by the end of 2019.

We are also committed to seeing the overseas territories and Crown dependencies take further action, and they have already made significant progress through consensual joint action. We are grateful, and we respect all the work they have done in this area. All Crown dependencies have central registers in place. Of the seven overseas territories with significant financial centres, four already have central registers or similarly effective arrangements. They are able to provide UK law enforcement authorities, on request, with access to such information, even at very short notice—it can be within 24 hours, or even within one hour in urgent cases.

14:00

[Ms Angela Eagle (Wallasey) (Lab)]

Will the Minister give way?

[Sir Alan Duncan]

I will give way only briefly.

[Ms Eagle]

I thank the right hon. Gentleman for his generosity in giving way. Does he agree that, although this is progress, it will be effective only if we have the light of transparency and these registers are available publicly, and not just to law enforcement authorities?

[Sir Alan Duncan]

I can answer with an unequivocal yes. That is a shared objective on both sides of the House. The only thing on which we have different opinions is the manner in which we get there. The objective is clear. The arguments are very finely balanced, and the hon. Lady may want to listen carefully to what I am about to say. We recognise the need to tackle illicit finances across the globe, including in the Crown dependencies and overseas territories. We are concerned, however, that the economic impact of imposing public registers on the overseas territories will be significant.

Furthermore, the overseas territories are separate jurisdictions, with their own democratically elected Governments. They are responsible for their own fiscal matters, and they are not represented in this Parliament. Legislating for them without their consent effectively disenfranchises their elected representatives. We would have preferred to work consensually with the overseas territories to make those registers publicly available, as we have done in agreeing the exchange of notes process.

[Sandy Martin (Ipswich) (Lab)]

Will the Minister give way?

[Sir Alan Duncan]

No, not for the moment.

We do not want to legislate directly for the overseas territories, nor do we want to risk damaging our long-standing constitutional arrangements, which respect their autonomy. However, we have listened to the strength of feeling in the House on this issue and accept that it is, without a doubt, the majority view of this House that the overseas territories should have public registers ahead of their becoming the international standard, as set by the Financial Action Task Force.

We will accordingly respect the will of the House and not vote against new clause 6. Unless my right hon. Friend the Member for Sutton Coldfield chooses not to press the new clause, we accept that it will become part of the Bill. In the same spirit, I would appreciate it if the hon. Member for Bishop Auckland chose not to press new clause 14, which would add the Crown dependencies to that stipulation.

Her Majesty’s Government are acutely conscious of the sensitivities in the overseas territories and of the response that new clause 6 may provoke. I therefore give the overseas territories the fullest possible assurance that we will work very closely with them in shaping and implementing the Order in Council that the Bill may require. To that end, we will offer the fullest possible legal and logistical support that they might ask of us. Alongside that, we retain our fullest respect for the overseas territories and their constitutional rights, and we will work with them to protect their interests.

[Helen Goodman (Bishop Auckland) (Lab)]

I am pleased to have the opportunity to take part in the debates on Report of this important Bill. I will follow the same order as the Minister in discussing the amendments.

I took the rather unusual step of signing the Government’s Magnitsky amendments, new clause 3 and amendments 10 to 13, so this House can present a united voice to the whole world in expressing our abhorrence for gross human rights abuses and our determination to tackle them together.

I thank the right hon. Member for Newbury (Richard Benyon) and my hon. Friends the Members for Rhondda (Chris Bryant) and for Dudley North (Ian Austin)—the latter is not in the Chamber at the moment—all of whom have campaigned on this issue for a long time. Her Majesty’s Opposition believe that human rights should be at the centre of foreign policy. The only way gross human rights abuses will stop is if those who perpetrate them, order them and facilitate them are brought personally to account. They must pay the price.

Sanctions against individuals for gross human rights abuses were originally conceived as a response to the terrible treatment of Sergei Magnitsky, but we believe there is a wider problem. We note, for example, that the United States has sanctioned Maung Maung Soe, one of the generals responsible for the ethnic cleansing of the Rohingya in Myanmar.

Last year, the Criminal Finances Act 2017 enabled the Government to freeze the assets of people responsible for such crimes, and this Bill will enable us to ban visas and prevent such people traveling here. The only question is why it took so long for the Government to come round to seeing the importance of this measure.

We introduced so-called Magnitsky amendments in Committee that would have given us the same ability as Canada and the United States to implement targeted sanctions. Unfortunately, the Government initially did all they could to reject our amendments. They rejected them in principle on Second Reading; they reordered the consideration of the Bill; they suspended the Committee; and then they downright voted against the amendments. After the Salisbury incident on 4 March, the Prime Minister announced a complete U-turn. We are pleased the Government have seen the light, but it is unfortunate that it took such a tragic event for them to change their mind.

I am pleased to offer the support of Her Majesty’s Opposition to new clause 6, tabled by my right hon. Friend the Member for Barking (Dame Margaret Hodge). I congratulate her on her long campaign, which began when she was Chairman of the Public Accounts Committee. She has stuck with it over many years, and we see in the Minister’s announcement today that the campaign was well worth while. I also congratulate the right hon. Member for Sutton Coldfield (Mr Mitchell) on putting together a fantastic coalition of support for this change.

We believe the time to act has come. In 2014, David Cameron wrote to the British overseas territories recommending that they introduce public registers—the UK introduced a public register in 2016—and new clause 6 sets out a timetable for them to do so by 2020. Money laundering through London is estimated by the National Crime Agency to total £90 billion, and it is facilitated by the secret ownership of companies allowed in tax havens. Unfortunately, the British overseas territories and Crown dependencies are major actors. They enable the corrupt to live in comfort on their ill-gotten gains and facilitate tax avoidance and evasion on a spectacular scale. The UK is estimated to lose £18.5 billion each year. I am only surprised that the Chancellor of the Exchequer did not also sign new clause 6.

The poorest countries in the world are estimated by the United Nations to lose £100 billion a year through these tax havens, which dwarfs any aid flows we supply. That is another reason why new clause 6 is very much to be welcomed.

The scope for hiding large funds facilitates serious international crimes: drug dealing, people trafficking, sanctions busting, illegal arms sales and terrorism. Over and again, the names of the British overseas territories and Crown dependencies come up when these crimes are finally uncovered.

[James Duddridge (Rochford and Southend East) (Con)]

Clearly, it is important to remember that this is not just an overseas territories issue but a global one. Is the hon. Lady worried that this legislation will just displace all the activity to states such as Delaware, which do not have this transparency, and we will not gain any of the real benefits?

[Helen Goodman]

Of course the hon. Gentleman raises a worry, which has been expressed. My right hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) and I were in the United States a fortnight ago, when we met several members of the US Congress who are keen to crack down on Delaware, Nebraska and the other states there. Leading by example, which is what the last Administration did, is a way to make progress on this issue. I will come back to the international links later in my speech.

[Mr Geoffrey Cox (Torridge and West Devon) (Con)]

What does the hon. Lady say to the 50,000 or 60,000 inhabitants of the Cayman Islands, who were given a constitution in which the responsibility for the governance of their financial and economic affairs was solemnly conveyed to them by this Parliament? The measure she is supporting will require that constitution to be amended so that the section that conveys on them the power to make their own orders in these affairs will have to be removed. What does she say to them?

[Helen Goodman]

My understanding is that the position on the British overseas territories, as set out by a White Paper when the hon. Member for North West Norfolk (Sir Henry Bellingham) was a Foreign Office Minister, is that it is appropriate for this House to legislate for the Cayman Islands and the overseas territories if it is considered necessary. Given the long list of crimes, which I have just read out to the House, that are facilitated, it can be argued completely that when we are making changes in this respect, this is an international, foreign policy issue, as that is what we are talking about; we are talking about the financing of international crime and of terrorism. This is not like trying to intervene in street lighting or purely local matters. It simply has a completely different import for the world.

[Robert Neill (Bromley and Chislehurst) (Con)]

I understand the point the hon. Lady is making and, as a lawyer, I very much appreciate the importance of the international fight against crime and money laundering, but will she concede that at least some overseas territories take their obligations very seriously? For example, Gibraltar, which is part of the EU as well, has already publicly accepted that it will transpose the fifth anti-money laundering directive, which includes a public register of beneficial ownership, into place by December 2019? In a sense, such places do not need to be legislated for, because they are willing to do this. It is important to be proportionate in our approach, is it not?

[Helen Goodman]

Of course what the hon. Gentleman says about the fifth anti-money laundering directive is right, in so far as it does put obligations on Gibraltar. That was why I have linked new clause 14 to the fifth anti-money laundering directive, because clearly it is easier, in terms of international competitiveness, for many jurisdictions to move together.

14:15

[Sir Henry Bellingham (North West Norfolk) (Con)]

The hon. Lady mentioned the 2012 White Paper on the overseas territories, in which we said that in extreme cases we would legislate on such matters but that we would always try to build consensus first, because of our great respect for the constitutions of those territories. I plan to make a few remarks about that, but given the Government’s announcement today, will she confirm that she will not press new clause 14, which would extend new clause 6 to the Crown dependencies?

[Helen Goodman]

I will come on to that at the end of my speech.

I was explaining that these crimes are significant and that we see money being laundered in the UK, and I wanted to give the example of Mr Temerko, who was once a senior figure in Russia’s defence industry and who rose to become a key player in the Russian oil giant Yukos. His engineering company, Offshore Group Newcastle Ltd, had a large site up in Hadrian’s yard in Newcastle, where it was doing some energy work. The company won a grant from the Government’s regional growth fund in 2013, but it later went into administration and the work in the north-east was left unfinished. OGN Ltd is owned by a parent company based in the secrecy jurisdiction of the British Virgin Islands. Clearly, the effects of the lack of transparency are not felt solely in London; they are felt across the United Kingdom.

As I have said, I acknowledge that progress has been made, in so far as registers of beneficial ownership or “similarly effective systems” have been set up, but these are not transparent.

[Mr Jim Cunningham (Coventry South) (Lab)]

After the incident in Salisbury, I was led to understand that the Government were cracking down on money laundering in this country, particularly in respect of these Russian oligarchs. Does my hon. Friend not agree that the Government should pursue this a lot further than they have been doing?

[Helen Goodman]

I certainly agree with that. Obviously, the law enforcement agencies—the National Crime Agency, the police and the Serious Fraud Office—need more resources. They would then be in a better position to crack down on this money laundering.

The purpose of transparency is not for the entertainment and titillation of the curious; it is to facilitate the authorities’ ability to track down illicit flows, because they can see the connections and links. This effectiveness of transparency was demonstrated by the fact that the Panama and Paradise leaks enabled Her Majesty’s Revenue and Customs to open civil and criminal investigations into 66 people, to pursue arrests for a £125 million fraud, to tackle insider trading and to place dozens of high net worth individuals under review.

I am extremely pleased that the Minister said what he did about not opposing new clause 6, which stands in the name of my right hon. Friend the Member for Barking. I welcome his change of heart on that. He has, in the written ministerial statement he produced this morning, bigged up the role of the Financial Action Task Force, and I was a bit surprised by that, as the FATF is a rather unsatisfactory forum. It is an inter- governmental body with no legal personality or explicit formal authority under international law and no enforcement powers. It has 37 members, which include Russia, China and the Gulf Co-operation Council. Foreign Office Ministers have been eloquent in recent months in saying that the United Nations Security Council is ineffective in upholding international law because of the Russian veto, yet here, when we want to tackle the financing of major crimes and terrorism, they seem content to hand over their moral compass to the Russians. The FATF is also highly secretive; in answer to my questions, Ministers have refused to publish future agendas or papers for discussion. Even the UK does not always ensure its FATF representative has a thorough-going commitment to reform—for years it was a person who had his family money in a secret Bahamas trust. So I will be very pleased if the House can unite behind new clause 6 this afternoon.

I turn now to new clause 14, which would require public registers in the Crown dependencies. The case in principle for acting to improve transparency in the Crown dependencies—the Channel Islands and the Isle of Man—is substantively the same: their secret ownership arrangements facilitate both money laundering and tax evasion.

[Gavin Robinson (Belfast East) (DUP)]

The hon. Lady will have heard what the Minister said in his speech about the response that the Isle of Man and other Crown dependencies are able to give within hours, whenever a request is made for information that falls within a terrorist category. Does she accept that the Crown dependencies forthrightly, earnestly and efficiently provide information to our law enforcement agencies within hours, when it is requested?

[Helen Goodman]

The hon. Gentleman makes the same point about the Crown dependencies as other Members have made about the British overseas territories. The current situation is as he describes it—if the law enforcement agencies want information and ask for it, the authorities in the relevant jurisdictions give it to them—but the problem is that, to crack down on serious and organised crime, it is really useful to see the whole picture, and we can see the whole picture only if we have all the information. That is the point of transparency and that is the lesson from the Panama and Paradise papers.

[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

My hon. Friend is making a brilliant speech. Have we not learned that dark money will move to wherever the law is darkest? If we bring transparency to the overseas territories, most of the money is simply going to be relocated to the Crown dependencies, unless we change the law to cover them, too.

[Helen Goodman]

That point was made to me by the Minister and his officials when we discussed the Bill, and my right hon. Friend is absolutely right that, because we are making changes in respect of the overseas territories, we need to make changes in respect of the Crown dependencies.

[Ms Angela Eagle]

My hon. Friend is making an extremely good speech. Does she agree that the time for secrecy in all these jurisdictions is now over? We need transparency so that we can minimise the abuse—whether tax evasion, tax avoidance, or the laundering of criminal money—that is becoming more and more of a feature in these jurisdictions. Does my hon. Friend agree that once we have our own house in order, we can then campaign internationally to close down all tax havens?

[Helen Goodman]

My hon. Friend has succinctly made my whole case for me. She is absolutely right. Those people who think that the situation in the Crown dependencies is not as serious as that in the British overseas territories need only to remember the 957 helicopters that were registered on the Isle of Man to avoid VAT.

[Several hon. Members rose—]

[Helen Goodman]

I shall make a little more progress, because many Members want to speak.

I have linked new clause 14 to the fifth anti-money laundering directive, so that we would see a number of jurisdictions moving together. I am pleased that the Government have accepted the secrecy jurisdictions and that we have a role with respect to the overseas territories, but we need an effective path to bring change according to a timetable, within the current Parliament, and new clause 6 tabled by my right hon. Friend the Member for Barking would provide that. I will not press new clause 14 to a vote—I was not going to press it in any case—because I think we can reach an agreement on how to proceed on these matters.

[Dame Margaret Hodge (Barking) (Lab)]

Let me start by saying how grateful I am to all right hon. and hon. Members from all parties who support new clause 6. I am particularly grateful to the right hon. Member for Sutton Coldfield (Mr Mitchell), who has worked with me on this important issue and shown his particular skills and experience as a former Government Chief Whip.

The fact that the new clause commands such wide support throughout the House speaks volumes for what it says. Our proposal is right in principle and will be effective in practice. When it is passed—I am grateful to the Minister for conceding that the Government will not oppose it—this simple measure to require British overseas territories, our tax havens, to publish public registers of beneficial ownership will transform the landscape that allows tax avoiders, tax evaders, kleptocrats, criminals, gangs involved in organised crime, money launderers or those wanting to fund terrorism to operate. It will stop them exploiting our secret regime, hiding their toxic wealth and laundering money into the legitimate system, often for nefarious purposes.

Transparency is a powerful tool. With open registers, we will know who owns what and where and will be able to see where the money flows. We will thereby be better equipped to root out dirty money and deal with the related issues, and we will be better able to prevent others from using secretive jurisdictions to hide their ill-gotten gains.

[Sammy Wilson (East Antrim) (DUP)]

Does the right hon. Lady accept that open registers are not the panacea that she is describing? Indeed, the UK currently has open registers, but the name and address of an 85-year-old was used fraudulently to register 25,800 companies, without anyone discovering that fraud.

[Dame Margaret Hodge]

Open registers are an essential tool. They are necessary, but they are not sufficient. We also need a strong regulatory framework for the establishment of companies and strong policing arrangements to ensure that the regulations are implemented.

[Toby Perkins]

My right hon. Friend is absolutely right to pay tribute to Members from all parties, including the Conservative Members who bravely supported her even when the Government attempted to buy them off. On behalf of many Members from different parties, may I say how grateful we are for the tenacity that she has shown and the excellence with which she has pursued this campaign? It shows Parliament in a good light, and the measures that the House is set to approve will do a great deal of good.

[Dame Margaret Hodge]

I thank my hon. Friend for his kind words, but it really has been a team effort, with people from throughout the House and across all the political tribes.

New clause 6 would simply put into legislation proposals that David Cameron first articulated in 2013, when he spoke about ripping aside the “cloak of secrecy” and repeated the well-known mantra, “sunlight is the best disinfectant”. It would do no more and no less than fulfil the commitment made by the then Prime Minister five years ago.

Britain sits at the hub of the world’s largest network of secretive jurisdictions, and British tax havens are central to the movement of illicit moneys around the world. The secrecy under which they currently operate facilitates wrongdoing on an industrial scale. We have a weak regulatory regime, some of which was enacted by the previous Labour Government and needs reform, and sadly we have lax policing of our system. Couple that with the secrecy that prevails, and Britain and our overseas territories have increasingly become the most attractive destination for crooks, kleptocrats and corrupt individuals who engage in financial skulduggery. If we do not accept new clause 6, we will be in danger of sacrificing our traditional reputation as a reliable jurisdiction by our failure to challenge the secrecy.

[Liam Byrne]

I very much echo the sentiments of my hon. Friend the Member for Chesterfield (Toby Perkins). Does my right hon. Friend agree that it is impossible for us to get unexplained wealth orders to work unless we put in place registers not only for our countries and the overseas dependencies, but for the Crown dependencies, too?

[Dame Margaret Hodge]

I entirely concur with my right hon. Friend’s important point.

Let me take Members through the argument, because it is important that we understand what we are dealing with. First, on the scale of the problem we are tackling, the National Crime Agency reckons that around £90 billion a year is laundered through the UK. We know that developing countries lose three times as much in tax avoidance as they get in all the international aid that is available to them. Half the entities cited in the Panama papers were corporations registered in just one of our overseas territories: the British Virgin Islands. We know that, in the past 10 years, £68 billion has flowed out of Russia into our overseas territories. That is seven times more going to the overseas territories than has come to Britain. We know that there are 85,000 properties here in the UK that are owned by companies registered in our tax havens, half of which are in just two constituencies in London, and a sample survey done by Transparency International suggests that two out of five of those properties have Russian owners.

14:30

Tax avoidance and financial crime are not trivial irritants. The problem is widespread and it is corrosive. If we fail to act, we are complicit in facilitating the very corruption that this Government and this Prime Minister have told us that they are determined to tackle. Let me say that

“if we want to break the business model of stealing money and hiding it in places where it can't be seen: transparency is the answer.”

Those are not my words; they are the words of the former Prime Minister, David Cameron, in September 2015.

I shall deal briefly with the arguments that have been put forward by some in opposition to our proposal. Some say that we should not legislate on these issues for our overseas territories. I agree that it would be far, far better for all of us if those overseas territories willingly enacted public registers, but we have now had five years, and it is clear that they will not act without real pressure from us. Our new clause gives them a further three years—until the end of 2020—to adjust to a transparent regime. Of course, we should provide all the support and assistance they require to modify their economies to the new environment.

The present practice is unsustainable. The fifth money laundering directive from the EU will bring in public registers across the EU by the end of 2019. As the hon. Member for Bromley and Chislehurst (Robert Neill) said earlier, that will mean that Gibraltar will act before the implications of this Bill are felt in 2020. Countries across the world—from Nigeria to Afghanistan—are now beginning to commit to public registers, so this is flowing with the tide of practice across the world. We should be showing leadership on this, not trying to be the last man, or the last woman, standing against what is morally right.

[Chris Bryant]

So far, we have been talking about public registers of beneficial ownership of companies. Does my right hon. Friend accept that this should also apply to beneficial ownership of trusts? It seems incomprehensible to me that we in this country should keep the trusts quite separate and quite hidden.

[Dame Margaret Hodge]

I completely concur with the point made so forcefully by my hon. Friend. No doubt that will be subject to further campaigns for a change in legislation over the coming period.

[John Penrose]

May I just follow up on that last point? It is not just trusts that are an essential and major omission here. It is also other kinds of assets, including real estate, mineral rights, debt and bonds. Unless we have complete and comprehensive registers in due course, my worry, and the worry of others, is that we may be over-claiming the benefits of transparency. It may be a necessary step, but it certainly does not cover all those other areas, which, arguably, are more important.

[Dame Margaret Hodge]

I welcome the contribution from our anti-corruption champion—the hon. Gentleman was appointed by the Government to fulfil that role. Indeed, he is right, but I hope that he will work with me and others in ensuring that we get better coverage for the public registers. However, that should in no way limit what we are attempting to achieve today, which will be a remarkable, important and really world-changing measure in the fight against corruption.

Our overseas territories are an integral part of Britain and they should be guided by the same values as us. Clamping down on corruption and toxic wealth is morally right. We will never be a truly global Britain on the back of stolen principles. Other Members have mentioned the White Paper that was published by the Government in 2012 on our relationship with our overseas territories. I simply refer Members to one phrase in that document:

“As a matter of constitutional law, the UK Parliament has unlimited power to legislate for the territories.”

The Government put that phrase pretty high up in that White Paper, so they are jealously guarding their powers in relation to the overseas territories. These are powers that we should always be reluctant to use, but they are also powers that Governments of both parties have employed in the past.

[Mr Cox]

In 2009, we gave the people of the Cayman Islands a solemn pledge in this House. We said, “We will not legislate for you in these areas of public responsibility without your consent.” By this measure today, we are breaking that promise to them, and it is beneath the dignity of this Parliament to do away with that promise and that pledge of good faith.

[Dame Margaret Hodge]

I simply draw the attention of the hon. and learned Gentleman to what his Government stated in 2012 in the White Paper. In that White Paper, they set out the fact that they were jealously guarding their right to legislate as and when that became appropriate. That is what his Government said in 2012.

[Mr Bob Seely (Isle of Wight) (Con)]

On a point of record, I believe that that was in our previous two manifestos, so I am not quite sure why we, on the Government Benches, are arguing on this point.

[Dame Margaret Hodge]

I thank the hon. Gentleman for his intervention.

For the sake of clarity, let me just say that, in the past, Conservatives have used this power when they legislated to ensure that capital punishment was abolished in all our overseas territories. A Labour Government used the power to ensure that we brought to an end discrimination on the grounds of sexuality in our overseas territories. One of us—I never remember which—used the power to intervene in the Turks and Caicos when there were problems with the administration of governance.

[Mr Kenneth Clarke (Rushcliffe) (Con)]

The right hon. Lady has conceded that we use with reluctance our undoubted power to exercise our jurisdiction in these territories and she has given the very important areas in which this House has already done that. Does she accept that, when such vast sums of dishonest money are being channelled through the territories, and when such obviously little progress is being made in many of them to deal with the matter, that is a situation that justifies our jurisdiction? As the Cayman Islands have a rather better record than some of the other British overseas territories—they do co-operate very closely with our law authorities, as the dependent territories do—it is open to their Government to consider the matter and act on their own accord given the steer that this House is giving to them.

[Dame Margaret Hodge]

I completely concur with the right hon. and learned Gentleman’s succinct remarks. People have said to me that the areas in which we have intervened—we do intervene with huge reluctance—are moral issues. I cannot think of another issue that is more moral than trying to intervene to prevent the traffic in corrupt money and illicit finance across the world.

[Adam Holloway (Gravesham) (Con)]

Does the right hon. Lady agree that corruption also costs lives and violates people’s human rights?

[Dame Margaret Hodge]

Absolutely. That is why the Magnitsky amendment, which we have just passed, is absolutely central to our proceedings and legislation on anti-money laundering.

[Hannah Bardell (Livingston) (SNP)]

I thank the right hon. Lady for giving way and I congratulate her on this excellent cross-party consensus. Is she not concerned that the hon. and learned Member for Torridge and West Devon (Mr Cox) seems more concerned about a promise made to the Cayman Islands than about the people of his own constituency and of the UK who are suffering as a result of corruption and money laundering? Does that not seem odd?

[Dame Margaret Hodge]

The truth is that the traffic in illicit money has an impact not just on people here in the UK—for example, through the acquisition of properties here—but worldwide. We see that in the losses in tax revenues, particularly to the poorest developing countries.

[Mr Cox]

Will the right hon. Lady give way?

[Dame Margaret Hodge]

I do not think that the hon. and learned Gentleman and I are going to agree. I am going to make some progress because I know that other Members wish to say certain things.

Openness and transparency do not stop the overseas territories from choosing to try to compete on tax. Although I would not approve, they can all set a corporation tax rate of zero. If they believe that that is a way of attracting financial services into their countries, they are free do so. We are asking for openness and not much more. I do agree with their argument that our registers need to be improved, but that is not an either/or; it is a both/and. We need both to improve our registers and ensure transparency in our overseas territories. To those who argue that the money will transfer to other tax havens, I say this: there may well be some leakage, but our tax havens play a disproportionately large role in the secret world that makes tax havens. If we lance that boil, it will be far easier for us to secure transparency elsewhere and much harder for other tax havens to sustain their business models.

Our campaign on transparency is not and has never been partisan. My party believes passionately that transparency is vital in the battle against financial crime and money laundering, but all Members of this House—from all the political tribes—share our determination to eliminate the wrongdoing that inevitably springs from the secrecy that pervades our tax havens. We cannot sit here and ignore the practices that allow Britain and our British overseas territories to provide safe havens for dirty money. If we can act to root out the corruption, we must do so. Our proposal is simple but powerful. It is easy to implement but lethal in its effectiveness. It is not just legally possible; it is morally vital. Britain and our overseas territories will not get rich on dirty money. We must act now and new clause 6 is an important move in doing so. I ask the House to support it.

[Mr Andrew Mitchell (Sutton Coldfield) (Con)]

I draw the attention of the House to my declaration in the Register of Members’ Financial Interests.

Before I speak about new clause 6, I would like to thank my right hon. Friend the Minister for Europe and the Americas on two other issues, the first of which is the Magnitsky amendment, for which many of us made the case on Second Reading, especially with regard to a degree of independent input from the House into the visa banning and sanctions regime. No doubt aided by the dreadful events in Salisbury, we have all now got to the same place, and I am grateful to him and his colleagues for ensuring that that is the case today.

The second issue—I know from our time together at the Department for International Development that my right hon. Friend understands this well—is about trying to ensure that no unnecessary restrictions will stop money flows for humanitarian charities and non-governmental organisations that often operate with great bravery in extremely difficult and contested areas. I understand that very good progress has been made on that, and I hope that he will keep an open mind if there are future difficulties in that regard.

I turn to new clause 6. It has been a tremendous pleasure to work with so many colleagues from both sides of the House, and I am grateful to many of my own colleagues for standing firm in the face of considerable pressure. It has been a very pleasurable experience to work closely with the right hon. Member for Barking (Dame Margaret Hodge) over the past six months, and the House has clearly benefited hugely from her distinguished period as Chair of the Public Accounts Committee. I think that this is the fourth time that we have been around this track, so it is now time for the House to assert its authority and nudge the Government into the right place. I am therefore delighted that the Government have indicated that they will accept new clause 6. I cannot forbear to point out that this is evidence that, in a hung Parliament, power passes from the Cabinet room to the Floor of the House of Commons. I was going to urge the House to support new clause 6 and, with the deepest respect, reject the Government’s starred amendments, which were tabled at the last moment yesterday, but in fact you did not select them, Mr Speaker.

11:30

New clause 6 builds further on the coalition Government’s important work, including at the UK-led G8 summit, in bearing down on money laundering, corruption, tax evasion, terrorist financing and fraud. Much of the money, as the Paradise papers and the Panama papers make clear, passes through British overseas territories. Public registers help us to understand who owns what and how these ill-gotten gains are flowing. The House should be in no doubt that a huge amount of this money is filthy lucre. The National Crime Agency has calculated that £90 billion is laundered through the UK each year—that is truly startling. This laundering can only be done, by and large, through British overseas territories, which are central to this nefarious activity.

The House should focus on the figures mentioned by the right hon. Member for Barking: 85,000 properties in the UK are owned by companies incorporated in our tax havens, and half of those properties are in just two London boroughs. Some 40% are acquired with Russian money and bought through shell companies incorporated in our tax havens. Sunlight is the best disinfectant. Openness and transparency are the key to stamping this out. We are talking about the laundering of illicit money from modern day slavery and the sex trade; money from the proceeds of crime, terrorism and corruption; and money that is stolen from Africa and Africans by bent politicians, dictators and war lords.

Convincing research suggests that nearly £70 billion flowed out of Russia through our overseas territories between 2007 and 2016, as the right hon. Lady mentioned. This money belonged to kleptocrats, crooks, gangsters and terrorist gangs.

[Dr Matthew Offord (Hendon) (Con)]

It is not just crooked money though, is it? The World Bank’s International Finance Corporation invested £400 million through Cayman-based investment vehicles in 2015 alone, and that money supported projects in 24 developing countries. There is good as well, is there not?

[Mr Mitchell]

Of course, and that is exactly the sort of fact that would be displayed by an open register. My hon. Friend makes my point for me. That is the sort of openness that we seek. We seek to expose the sort of money that I have outlined and that the right hon. Member for Barking so eloquently described.

David Cameron’s Government understood this clearly. He showed real leadership by insisting that what he called the “shroud of secrecy” must be ripped away in this fight against money laundering and tax evasion. If the House had drawn back from agreeing to new clause 6 today, it would have sent a terrible signal against what has previously been a really strong strand of global Britain. It would have been a huge relief to thieves and money launderers around the world that our tax havens would have remained open for business.

I turn to the four matters of concern to the overseas territories in the hope of reassuring them that the House is putting in place a practical measure that is not as serious as some of them seem to believe. The first concern is the belief that the measure will damage the overseas territories’ economies and destroy their income. No doubt the same arguments were used against the abolition of the slave trade. It is true that there may be some immediate but modest effect, but consider the nature of much of the funding that the overseas territories are handling and that I and others have described. In fact, the economy of the British Virgin Islands, for example, may actually improve, because much of its business is professional, transparent and completely proper. In the past, I have myself invested in an international property fund in the BVI that was properly governed. In such cases, people from different jurisdictions can put funds in without a tax charge, but when they take funds out, they pay tax in the jurisdiction where they live. So it is perfectly possible, and in my view quite likely, that if open registers are fully implemented in a jurisdiction such as the BVI, some of the serious international financial organisations and banks will choose to go there, although they do not do so today.

[Sir Henry Bellingham]

I declare an interest as chairman of the all-party group for the British Virgin Islands. I sympathise, in many ways, with much of what my right hon. Friend is saying, but if there is a temporary hit to the BVI economy because of real difficulties in transitioning to the new arrangements that he has outlined, what help should the Foreign Office try to give to the BVI?

[Mr Mitchell]

I will come to that point in a moment, but I hope that my hon. Friend will extol to his friends in the BVI the fact that this is not something that they should regret and seek to avoid, but something that offers them real commercial and economic opportunities.

The second argument, as we have heard, is that the territories already have closed registers that are available to law enforcement authorities and HMRC which, in the case of terrorism, will react promptly—almost within an hour. That is of course true, but it completely misses the point. That point is made eloquently but passively by the Panama and Paradise papers: it is only by openness and scrutiny—by allowing charities, NGOs and the media to join up the dots—that we can expose this dirty money and the people standing behind it, and closed registers do not begin to allow us to do that.

[Robert Neill]

I understand my right hon. Friend’s desire to achieve this measure and recognise the work that he has done on it, but I want to follow on from the point made by my hon. Friend the Member for North West Norfolk (Sir Henry Bellingham). The Government of Spain, for example, often use broad-brush terms such as “tax haven” against the law-abiding British territory of Gibraltar. Will my right hon. Friend extol the fact that Gibraltar has complied and continues to comply absolutely with all EU requirements? We do not help the overall cause by allowing British territories that comply with the rules to be tarred with the same brush as those that do not, as some people will use that against law-abiding British Gibraltarian citizens’ interests.

[Mr Mitchell]

My hon. Friend makes an extremely good point about Gibraltar. I have heard him speak about that subject in the House previously, and what he says is absolutely right. Last night, I received a three-page letter from the Chief Minister of Gibraltar. I was at a loss to understand why he felt that new clause 6 negatively affected him, since he has already committed, through the EU directive, to implement the whole of the new clause one year earlier than is specified. I therefore feel that the Chief Minister and my hon. Friend should be content with new clause 6.

[Mr Kenneth Clarke]

I entirely agree that the Government of Gibraltar achieve the standards described by my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), and I agree with my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) that as they are about to go further, the new clause does not affect them. I recall, however, that that was not always the case. Twenty or 30 years ago, persuading the then Government of Gibraltar that access to EU financial markets required an altogether higher standard of regulation and compliance was not an easy task, and we had to imply that we might take steps to exercise our powers unless something was done about it. That might be a useful precedent for the overseas territories in the Caribbean with regard to the step that the House is taking today.

[Mr Mitchell]

My right hon. and learned Friend the Father of the House, given his longevity and distinguished ministerial experience over many years, will be familiar with the points that are being made about Gibraltar and, indeed, about the importance of clamping down on money laundering.

Thirdly, the overseas territories pray in aid the prayer of St Augustine—“Oh Lord, make me chaste, but not yet”—and argue that all the hot money will go to the Dutch Antilles. But it is a little bit like the battle against malaria. We seek to narrow the footprint of that disease—in this case, of illicit money—to diminish the areas affected, and then eradicate it. Through this measure, we will significantly narrow the footprint of tainted money. We should bring the same vigour and determination to the fight against poisoned money as we do to the fight against deadly insects.

[Huw Merriman (Bexhill and Battle) (Con)]

I worked as a repackaging lawyer who used to set up these companies around the globe—[Interruption.] For European investors, I hasten to add. I gently point out that it is very easy to set up a Delaware business trust, and as more moneys flow into Delaware business trusts, it may be difficult to persuade the American authorities to take the same steps as these, laudable as they are, because otherwise the trusts will be worth even more money to Delaware and the United States. Will my right hon. Friend consider that?

[Mr Mitchell]

My hon. Friend makes a good point about Delaware, but perhaps we should come to that on another occasion.

[Chris Bryant]

We should bear it in mind that the sanctions regime imposed by the United States of America ends up being far more aggressive, meaning it is far more difficult for Russian oligarchs to hide their money there. In fact, that has now had a significant impact on Oleg Deripaska’s holdings in this country.

[Mr Mitchell]

The hon. Gentleman speaks good sense. He, like me, will have been very pleased to hear from the Minister how the Magnitsky provisions will apply.

I come to the fourth and final argument that the overseas territories submit: the use of an Order in Council is over the top in this day and age; and using the royal prerogative to legislate for the OTs by Order in Council is wrong. It is right that the House considers that argument, but our new clause does so by making an Order in Council a last resort to be used only if the overseas territories have not done what we have already done in the UK and introduced open registers by the end of 2020. Others have mentioned the precedents for using an Order in Council. This House and the Government are entirely entitled to use such a mechanism if necessary—they have done so, as the right hon. Member for Barking explained—but those signing and speaking to this new clause hope that it will not be necessary. In summary, the overseas territories share our Queen and travel under our flag, and they should also share our values.

In this new clause, the right hon. Lady and I have agreed to significant concessions that I hope the overseas territories and Crown dependencies will appreciate. First, there is the total exclusion of the Crown dependencies. The Lord Chancellor was most persuasive over the past week, and they do have a different governance structure. However, I believe that Parliament will expect Her Majesty’s Government to make the point persuasively that we hope that the Crown dependencies will embrace the same ethical position and equal transparency, and accept that what is sauce for the goose is also sauce for the gander.

Secondly, while both the right hon. Lady and I believe that the overseas territories should take these steps now, the Foreign Secretary was eloquent in pleading the immense difficulties that have been caused to some of these economies by the hurricanes. That is why the right hon. Lady and I agreed that we would put the timescale back by some two and half years, to the end of 2020. I very much hope that the overseas territories will take note of that. We are trying to be helpful, within the confines of the principles that we have set out in the new clause.

[Sandy Martin]

Does the right hon. Gentleman agree that whatever the actual constitutional position, the British people regard the Isle of Man and the Channel Islands as part of this country and cannot understand why laws and regulations should be different in those places? Does he support my contention that the Government should work towards having the same levels of transparency and financial regulation in those Crown dependencies as are in place in England, Scotland, Wales and Northern Ireland?

[Mr Mitchell]

The hon. Gentleman has elaborated the point I have just made about how the House will expect the Crown dependencies to move towards the provisions set out in new clause 6 for overseas territories.

I urge all Members to support new clause 6. We must remember that the highly respected Africa Progress Panel has shown that in the Democratic Republic of the Congo, for example, at least £1.5 billion has disappeared in stolen funds and illicit money flows. As the World Bank has made clear, much of that money stolen from the people of Africa ends up in British overseas territories. The money stolen in that way dwarfs all the international development aid, development finance and foreign direct investment that flows into Africa every year. We owe it to the poor of Africa every bit as much as we owe it to our own taxpayers to support new clause 6 today and bring an end to this scandal.

12:39

[Alison Thewliss]

I rise to speak to the amendments in my name, on behalf of the Scottish National party. As I said earlier, I will formally withdraw amendments 31 to 33, which the cross-party amendments have dealt with adequately.

First, I would like to thank the Government and their advisers and civil servants for their time and expertise in the run-up to the Bill, as well as all those who sent me information and briefings, which have been incredibly helpful. I also want to particularly thank the experts at the Law Society, UK Finance, Roger Mullin, Richard Smith and David Leask for their thoughts on Scottish limited partnerships.

A lot has changed since the Bill began its process. Salisbury has focused minds and, I hope, will now result in some action. The UK Government went from trying to find a way to wriggle out of the Magnitsky amendment to the Prime Minister giving it her full support. Regardless of how the Government have come to that decision, I am grateful that they have finally come on board, and we can all be grateful that that move has been made.

I spent the weekend finishing Bill Browder’s disturbing book “Red Notice”, which details the lengths to which the rich and powerful in Russia are willing to go to preserve their ill-gotten gains. I recommend that all Members read it as an object lesson in Russian oligarchs’ power, which we need to be mindful of. It is a complex trail which finally led to the brave lawyer Sergei Magnitsky being wrongfully imprisoned, maltreated, tortured and eventually beaten to death in prison because he refused to perjure himself. He stood for the truth. He documented the human rights abuses against him, and, after his death, Bill Browder and his team campaigned steadfastly to bring some justice to the situation. That led to the Magnitsky Act in the US, which introduced Government sanctions prohibiting entry to the US and access to the US banking system for those involved in Sergei Magnitsky’s death. It has since been expanded in scope to become the Global Magnitsky Act, tackling more dirty money and dubious people.

The UK Government made moves on that with section 13 of the Criminal Finances Act 2017. The amendments today expand on that in a very welcome way, and I am glad to give my party’s support to them. It is crucial that the names go on the record, and I am glad that the Government have committed to an administrative list being publicly available. I could read out right now all the names that are currently on the American Magnitsky list, because they are in the public domain and everybody can see them. There is transparency and accountability, with nowhere to hide once someone is on that list. It is crucial that the list is used in the same way in the UK and that the webpage, or wherever the names are held, is available and updated regularly.

I appreciate that this is not an issue for the House, but I hope that Members will give further thought to how the process of parliamentary scrutiny will work. Will it be through a Committee? If so, which Committee? Will that Committee have powers to add names and conduct reviews? We must hold ourselves to the same standard as the existing Magnitsky list for this to be fully effective.

I want to speak about the issue of Scottish limited partnerships, which is dealt with in new clauses 1 and 19. We believe that linking an SLP with a human individual would go a considerable way to cracking down on the abuse of SLPs, so we suggest that a limited partner and a general partner must both be British citizens and that a general and a limited partner must have a UK bank account. That would, at a stroke, remove a great deal of illegitimate SLPs, while protecting those in agriculture and other areas who would be easily able to fulfil those simple requirements. The anti-money laundering requirements of our banks would act as a degree of deterrent to those seeking to abuse the system.

On new clause 1, until 2009 registrants of limited partnerships were required under the Limited Partnerships Act 1907 to provide the full name of the partners. However, the Legislative Reform (Limited Partnerships) Order 2009 confirmed that the legally required level of registration disclosure needed to be less expansive. The new clause would restore the basic information requested at the time of registration and introduce a requirement for one of the general partners to be a British citizen.

New clause 19, on the UK bank account requirement, would tie this a bit more tightly. Although SLPs’ name and country of incorporation may give them the veneer of a UK-regulated entity, at the moment their bank account and all their financial transactions can be run through overseas bank accounts that have few, if any, anti-money laundering checks on their account holders. We want to tighten that up significantly, because allowing that kind of abuse could severely damage the credibility of UK legal entities abroad.

[Helen Goodman]

I am most grateful to the hon. Lady for giving way. I took so many interventions on overseas territories that I forgot to comment on new clauses 1 and 19. We think that both are very sensible, given the explosion in SLPs in recent years and the complete failure to act on what has happened in the past year. New clause 19 is particularly powerful because it would mean that these people were within the ambit of the anti-money laundering legislation for the banking system.

[Alison Thewliss]

I thank the hon. Lady for her support. I hope to at least press new clause 19 to a vote, because there needs to be some action on SLPs, and tying it to a bank account is a good way of doing that.

The SNP is extremely proud of Scotland’s reputation as a successful place to conduct business, but with SLPs continuing to generate new scandals, there is an ever-growing reputational risk to Scotland, and indeed the UK, if action is not taken. I would like to take this opportunity to dig the Government up for their shenanigans on SLPs.

Owing to the diligent campaigning by the former Member for Kirkcaldy and Cowdenbeath, Roger Mullin, the UK Government launched a consultation on SLPs on 16 January last year and closed it on 17 March last year. We then had an election, in which my dear friend did not get re-elected. We waited. Questions were tabled, and we were told again and again by Government that a response on the consultation was imminent. There was nothing. A month ago, we were told that it would be a matter of weeks, but probably not until after the Bill came back. Last week, we were told by officials that the report on SLPs was awaiting sign-off in Government, and on Sunday there was an announcement in the press that action was going to be taken, with a “Crackdown on abuse of UK businesses for foreign money laundering”. When we get to the detail, what in fact is it? It is another consultation—it is a consultation about a consultation.

That simply will not do. The UK Government are well aware of the problems with SLPs, which are well documented. The Secretary of State mentioned earlier the evidence that led to the bringing into scope of the person of significant control. We know that that was required, and there was evidence on it. We are waiting for fines to be levied on people who have not registered their persons of significant control.

[Hannah Bardell]

Does my hon. Friend agree that the fundamental point in all this is that closing a consultation and then having a debate on Report shows a Government in complete chaos? How can they commit public money to a consultation process that has no influence on the legislation before us?

[Alison Thewliss]

Absolutely. The Government have been told all the way through this process that this is the opportunity to act on the evidence that has been gathered and is out there in the newspapers—it is in The Herald on a weekly basis, for goodness’ sake—about abuses of SLPs. The Government could have done something about this. They could easily support the amendments we are proposing to the Bill. The press release that came out said that there was

“growing evidence SLPs have been exploited in complex money laundering schemes, including one which involved using over 100 SLPs to move up to $80 billion out of Russia. They have also been linked to international criminal networks in Eastern Europe and around the world, and have allegedly been used in arms deals.”

So why will the Government not act?

Proposals are far too vague. We are promised that the Government will legislate as soon as parliamentary time allows. The Secretary of State said that the consultation will close on 23 July, so we are looking at after the summer recess before anything comes back to the House. This is the stuff of never-never land. Minsters could accept our new clauses and amendments today and start to legislate now. If they are really serious about this, they should stop fannying around, support the new clauses and amendments and stop the flow of dirty money through SLPs once and for all.

The Government’s move not to oppose new clause 6 is astonishing, but I am very glad they have made it. There has been some speculation by Conservative Members about the Scottish National party’s position on this issue, and I will deal with that, but I first want to pay tribute to the right hon. Members for Barking (Dame Margaret Hodge) and for Sutton Coldfield (Mr Mitchell) for their Herculean efforts in bringing this before the House today. For a long time, we did not know when or if the Bill was coming back, but they have steadfastly worked hard to garner cross-party support, and I absolutely pay tribute to them for doing so.

Earlier in the Bill’s progress, I made clear the reservations I had at first, and it should not be the case that the UK Government impose things on other territories. Again, I reiterate that I would not like this if it were about Scotland, but I should say to all Members who doubt the sincerity of the SNP’s position—[Interruption] I hear some of them chuckling—that we cannot envisage a situation in which a Scottish Government would deliberately act to damage the financial interests of the UK economy by allowing tax evasion and avoidance to take place on an industrial scale within our jurisdiction and to shield the flow of dodgy money. That is what we are talking about today, and that is the fundamental difference. In Scotland, the fundamental issue of landownership is also hidden behind the shield of overseas entities.

[Luke Graham (Ochil and South Perthshire) (Con)]

Will the hon. Lady give way?

[Alison Thewliss]

I am just about to finish. [Interruption.] Let me finish this point, and I will then give way.

Landownership is hidden behind such entities. Just a few weeks ago, The Sunday Post highlighted the very important point that Scottish property is held in 22 different tax havens by 776 companies. Just last year, overseas firms bought £200 million of Scottish land and buildings, ranging in size from council estates to country estates, and the total value of such property is estimated to be £2.9 billion. This costs taxpayers in Scotland and here in the form of the capital gains tax revenue that is missed because the property has gone somewhere else. It has left the country, and there is no transparency. If the hon. Gentleman really wants to justify it, I will happily take an intervention from him.

[Luke Graham]

I actually wanted to praise SNP Members for standing up with others to support new clause 6 and back increased financial transparency. I also congratulate them on and thank them for recognising the sovereignty of Westminster in legislating for all parts of the United Kingdom and its overseas territories. I thank them for backing the constitution as it exists, and I appreciate such support at a time when we are looking for more investment in our constituencies, especially in relation to devolved matters.

[Alison Thewliss]

I must say that the hon. Gentleman makes a very simplistic argument. Unsurprisingly, he entirely misses the point. However, I welcome his support, which is very good. I hope that we will be able to claim back more money for our constituencies when there has been a crackdown on tax evasion and tax avoidance.

Why do we need to act now? Because the Prime Minister has committed to ensuring that the torrent of Russian dirty money stops, and Global Witness has found that over the past 10 years, more than seven times more money—an estimated £68 billion—has gushed from Russia to the overseas territories than into the UK. This has primarily been discovered through leaks, such as the Panama papers and the Paradise papers, and by the painstaking work of researchers and campaigners, including organisations such as Transparency International. They have tried to put that together, because we cannot see this hidden picture for ourselves.

Some of the money hidden in the British Virgin Islands has been revealed to be connected to the Magnitsky case too, so we must bear in mind the severe human rights implications of money laundering—with money hiding behind closed doors, where we cannot see it. There is an incentive for people to do that because they know that, at the moment, they cannot be found out. As hon. Members have illustrated, there are many cases of public funds being stolen from some of the poorest countries in the world and hidden in the overseas territories, and we cannot in all conscience allow this to continue.

Progress has been made by the overseas territories over the years, but the pace has been slow and the work has been patchy. The EU is moving towards having a public register of beneficial owners as part of the anti-money laundering directive, and we must play our part—regardless of Brexit—to keep up the pace towards international transparency.

[Huw Merriman]

Will the hon. Lady give way?

[Alison Thewliss]

I am about to finish, and I want to allow other speakers in.

This should be about everybody moving forward together on a global basis and gathering momentum towards transparency. I acknowledge the concerns of the overseas territories, but the case for action on corruption and money laundering is absolutely and completely compelling. I very much hope that we will not need to get to the position of using Orders in Council, because with such support public registers are entirely achievable.

I will talk more about Companies House later, if I am able to, but I want to close now by saying that I am not satisfied by the Government’s actions on SLPs. This is a missed opportunity, and I urge them to take real concerted action to do something today and make a change where they can.

15:10

[Sir Henry Bellingham]

I declare an interest as the chairman of the all-party group on the British Virgin Islands and as a former Minister for the overseas territories. I had the pleasure of visiting all but two of them during my time in office.

It is a pleasure to follow the hon. Member for Glasgow Central (Alison Thewliss). She said that not enough progress has been made, but I disagree. I think a lot of progress has been made, and I will come on to that in a moment. We are all of the same view, however, about the problem that exists, which was so eloquently outlined by the right hon. Member for Barking (Dame Margaret Hodge) and my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell). No one can disagree with what they said or about the scale of the problem; it is just a question of how we attack and deal with this problem.

When I was a Minister, I came across a number of examples of straightforward pilfering by different parties in African countries. One that my right hon. Friend and I dealt with, when he was the Secretary of State for International Development and I was the Minister for Africa, involved the Democratic Republic of the Congo, where a company called Tullow had its licence expropriated, completely unreasonably, by the DRC Government. It transpired that, after it was expropriated, it was handed over to a nephew, I think, of President Kabila and to a relative of President Zuma, while the company receiving the assets was registered in the BVI.

We know exactly what the problem is, but the question is how we should go about dealing with it. In many ways, I am disappointed with the Government. I feel that they should have tabled their new clause a bit earlier and made the arguments for it and that they should very much have stuck to their ground, but we must now move forward.

As far as the economies of those territories are concerned, unless people have had the chance to go there, it is difficult fully to understand the extent to which some of them have become dependent on international financial services—in the Caymans, it is obviously banking; in the BVI, it is international corporate registrations. They are extremely successful economies, with a very large number of professional service jobs clustering around their business model. I agree entirely with my right hon. Friend when he said that they can compete in other areas, such as tax and efficiency, as well as looking after the clients, and I hope that many parts of those professional and service businesses can expand, but there will be a disruption to their business model in the short term.

I am concerned that the Foreign and Commonwealth Office will be required to work incredibly closely with the Governments of those territories—particularly those of the BVI and the Cayman Islands, and to some extent those of the Turks and Caicos Islands and Bermuda—to make sure that, over the next few years, it puts in a huge amount of effort, knowledge sharing and capacity building.

My right hon. Friend will be more aware than anyone that, under the International Development Act 2002, the Department for International Development is the first port of call for financial assistance when something goes wrong in the territories. He and I obviously remember what happened in Montserrat, when DFID quite rightly came to the rescue, and when the Government of the Turks and Caicos Islands in effect went bust, DFID came up with a very large loan. That is why it is incredibly important that successful economies, such as that of the BVI, can transition to the new world in which they are going to have to live.

I would not have supported my right hon. Friend’s new clause 6. He asked me to support it, and I thought long and hard about it. In many ways, I would like to have done so, but I was very concerned about it for a few reasons, the first of which involves the constitution. As the hon. Member for Bishop Auckland (Helen Goodman) pointed out, I was the Minister responsible for the overseas territories White Paper in 2012, into which DFID had a significant input, as indeed did the Department for Environment, Food and Rural Affairs.

My right hon. Friend the Member for Newbury (Richard Benyon) assisted in that part of the White Paper that looked at international obligations on biodiversity and so on. The White Paper said that the UK Government could and would legislate in extreme circumstances, and that was a given because the territories are our responsibility. The citizens of those territories are as British as we are, and we have the ultimate responsibility for them. In some circumstances, we would of course legislate, and we reserved the right to do so. But the White Paper, and all the discussions and promotion on it, made it clear that that would always be a last resort, and in every circumstance we would try to build consensus and work in partnership with the territories.

France has a different model, with some of its territories incorporated into La France and with representatives in the Assemblée Nationale. We have moved to a model of home rule that is different in every case. Every territory has a different constitution and a different type of home rule, and we must work now to try to build consensus. I sincerely hope that the nuclear option contained in new clause 6 of Orders in Council will not be needed. We will have to work hard to make sure that we make progress in terms of what is outlined in the new clause. If we do not, I foresee a serious stand-off with at least three of the territories. I also fear for the economies of the territories if change happens very quickly and they have a significant loss of income. How will they transition and build up tourism, for example, or agriculture, where the BVI is very far behind?

I am concerned also that those territories have nascent independence movements and they will look at what has been said in the House today and say, “Well, if Britain is not prepared to work with us on a consensual basis, why should we remain in the British family?” I will do all I can to dissuade them from that course of action. Over the next two or three years, I hope that Ministers will have many discussions and make a generous offer of assistance, so that we can make progress in the right way.

[Jo Swinson]

The hon. Gentleman says that we need consensus and to try to work with the overseas territories. I would gently point out that the UK has been showing leadership on this issue since the international summit in 2013. Why does he think the overseas territories have engaged so little on this agenda, and why is he optimistic about success without the type of measure that the House will agree today, given that the Government have been making the case for five years?

[Sir Henry Bellingham]

I understand the hon. Lady’s point, but I would point out that some of us worked extremely hard to build up to the exchange of notes in 2016, so that our law enforcement agencies can access key information from, for example, the BVI within a matter of hours and use it in various measures they take against serious organised crime, money laundering, international slavery and the expropriation of assets—[Interruption.] I hope that it is someone important. On 70 occasions, the law enforcement agencies have been able to move against unsavoury people and get results.

If we move too quickly and without a decent transition, many of the corporate registrations will not stay in the BVI, the Cayman Islands, the Turks and Caicos Islands, Anguilla and so on: they will move to places such as Delaware, Panama, Venezuela, Nebraska and Equatorial Guinea—which my right hon. Friend the Member for Sutton Coldfield and I know well, as we have both visited it. Unless we are incredibly careful, that displacement will take place and, as the right hon. Member for Birmingham, Hodge Hill (Liam Byrne) pointed out, it will take place to the Crown dependencies.

[Mr Mitchell]

My hon. Friend does not appear to accept the point that has been made repeatedly today that the territories may well allow access to law and order agencies, within an hour in the case of terrorism, through closed registers, but that does not allow civil society—charities, NGOs and the media—to expose them to the sort of scrutiny that the Paradise and Panama papers did. They allowed us to join up the dots. That is why I emphatically disagree with him on this point about closed registers. They work for law and order agencies, but they do not work to stop the dreadful money laundering.

[Sir Henry Bellingham]

I will not get into an argument with my right hon. Friend because I think we agree on so much of this. My concern is that it required a leak from Panama to expose those people, and there will be many other jurisdictions that may not have leaks in future and where much of the business will go, unless the whole world moves to the end goal of open registers—

[Mr Kenneth Clarke]

I accept the point that my hon. Friend is making, but it is not the best point. Until we move, we have little chance of speeding up any response by Delaware, Panama and the other places he named. It is not an overwhelming argument to say, “Well, we should carry on having billions of pounds of criminal money flowing through our overseas territories while we wait for Panama to make a move.” That is not the strongest argument.

[Sir Henry Bellingham]

My right hon. and learned Friend the Father of the House is, as ever, very wise. I want to proceed on a pragmatic, staged basis, and I think we could have come together on the Government’s compromise, had it been tabled in good time.

[Mr Seely]

Would not just waiting until everyone else moves show a lack of leadership on our part?

[Sir Henry Bellingham]

That is a fair point, and those of us who have been supporting the Government loyally on this and working with them accept that it is a weakness in the argument. If we set an example, we hope that other people will follow. I hope that when the Minister winds up he will say how we will try to influence other countries and jurisdictions to follow this example.

[Mr Cox]

My hon. Friend has enormous experience of these territories and he will know, as I know, that the operation of surveillance and monitoring of flows of capital through the overseas territories is one of the best intelligence sources that we have on the movement of criminal moneys. To demand that the overseas territories all suddenly go public will give one hit—just like the WikiLeaks thing was a one-hit wonder—because no one will then trust those jurisdictions where the light of publicity has been shone. All it will mean is that the money goes to where it is darkest, as the right hon. Member for Birmingham, Hodge Hill (Liam Byrne) said. The surveillance and intelligence operations that have been so effective will no longer be applicable. I know the jurisdictions well, and that is what will happen.

[Sir Henry Bellingham]

I very much hope that what my hon. and learned Friend says will not happen. Unfortunately, there will be a period of time when many corporate registrations will go elsewhere and we will then need the rest of the world to catch up.

Will the Minister, when he winds up, spell out very clearly how the Foreign and Commonwealth Office and Department for International Development will work with the territories to help them with the transition over the next few years? What specific efforts will be made to help them to diversify their economies away from financial services? What expert advice will be given to build up parts of businesses that we hope will attract international interest? Will he outline to the House what measures he thinks his Department can take in terms of representations we make to other jurisdictions? Having set an example, we need to make a virtue of it. We need to go out and ensure that we play our part even more fully in OECD and G20 initiatives across every single organisation involved, particularly the IMF and the World Bank. Will he spell out what we will do to work with them to ensure that we raise standards elsewhere in the world?

Finally, I would have supported the Government’s proposed amendment as I thought it was sensible and pragmatic. It would have helped to build a consensus with the overseas territories, rather than move in a direction that could lead to very serious constitutional problems and difficulties unless we are very careful indeed. The Minister needs to use all his diplomacy and experience to ensure that the transition is done properly and correctly.

15:30

[Catherine West (Hornsey and Wood Green) (Lab)]

I promise to be brief, as there are so many colleagues who wish to speak. As a mere callow youth in this House compared to so many who have campaigned on this issue for a number of years, I just want to put my views on record.

My right hon. Friend the Member for Barking (Dame Margaret Hodge), my predecessor as leader of Islington Council, has led the way on this matter. I commend her and others for the excellent cross-party nature of their work. The right hon. Member for Sutton Coldfield (Mr Mitchell) argued that this measure will enhance not just our standing in international development, so that we can feel good about ourselves, but the work in developing nations to enrich everybody, not just a few who may benefit, often nefariously, from the tax havens that operate and provide cover for bad behaviour. I commend my hon. Friend the Member for Bishop Auckland (Helen Goodman) for all her work in Committee and all the tiny tit-bits she has let us have, as Members with an interest, as it has progressed. It has been like following a series on television. I am so pleased that we can welcome the Magnitsky clause and new clause 6.

As a London Member, I want to put on record how pleased I am that there are measures that may assist in relation to property. It may not be perfect, but those of us who are London Members have very affluent parts of our constituencies where properties are purchased, often at a very high price, but then sit empty as assets, while in other parts of our constituencies families live in overcrowded homes. We need to use such international approaches to try to achieve some sense of equality.

[Hannah Bardell]

Given that across London almost 40,000 properties are owned by companies based in tax havens and given the scandal after Grenfell of trying to find people homes, does the hon. Lady agree that there is huge concern about these companies and organisations, and whether we are able to tackle the housing issue?

[Catherine West]

Indeed. And I hope that the challenge will be met to reduce inequality in housing in Scotland, because I know that a very small number of people own rather a lot of properties.

On the role of other facilitators of tax evasion and avoidance and the big four accountancy firms, many Members feel it is time that they were brought to book. My right hon. Friend the Member for Barking has done a lot of work on that. The next stage is to try to clean up the City of London more effectively and to see the closure of certain poor practices, such as Mossack Fonseca and others. Yes, it was a one hit wonder, but we did see the closure of a number of underperforming legal practices. The next step of this campaign is how to allow the pin-striped enforcers of tax evasion and avoidance to have a more honest and equal way of practising their profession.

That is all I want to say. It is so good to see consensus in the House today.

[Mr Seely]

It is a privilege to follow the hon. Member for Hornsey and Wood Green (Catherine West).

I believe that the fight to improve the integrity of our financial system and to do what we can to reduce money laundering is critical in the fight against not only corruption but the malign influence of authoritarian states. I very much welcome the work done by my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) and the right hon. Member for Barking (Dame Margaret Hodge). I felt very proud to agree to rebel against the Government— I am quite glad I did not have to—but nevertheless, I thank them for that amendment.

On the point about corruption and the malign influence of others, the right hon. Member for Birmingham, Hodge Hill (Liam Byrne), the hon. Member for Rhondda (Chris Bryant), the right hon. Member for Exeter (Mr Bradshaw), my hon. Friend the Member for Gravesham (Adam Holloway) and I have been shown documents that we believe relate to our national security and money laundering. They originate from Monaco’s Sûreté Publique, the police department that manages security and foreign residents in that area. They are based on the Sûreté Publique’s own information and on information provided by the French Direction de la Surveillance du Territoire—the DST—which at the time, was the French equivalent of MI5.

These documents are brief, terse, factual files, listing activities, associations and judicial actions. They have been authenticated by senior French intelligence sources and by British and American counterparts familiar with their contents. The documents link a noted individual in this country with Russian intelligence. These files are dated from 2005 and cover the period from the mid-1990s. The documents concern Christopher Chandler and his brother—Christopher Chandler is a public figure, owing to the Legatum Institute. In citing this evidence, I note the words of the right hon. Member for Exeter, who in November 2017 called for the House’s Intelligence and Security Committee to examine Mr Chandler.

According to the French security services, as recorded by their colleagues in Monaco—and clearly, I am confident that these documents are genuine—Mr Chandler is described as having been

“an object of interest to the DST since 2002 on suspicion of…working for the Russian intelligence services.”

I repeat:

“an object of interest to the DST since 2002 on suspicion of…working for the Russian intelligence services.”

[Mr Ben Bradshaw (Exeter) (Lab)]

As the hon. Gentleman rightly said, I first raised concerns about Legatum and Mr Chandler back in November. Does he agree that the information that he has just put in the public domain, combined with the growing concern about corruption, money laundering and the sale of passports in Malta, where Chandler has just acquired citizenship, demands urgent investigation by the UK authorities now?

[Mr Seely]

I am most grateful for that intervention. I am aware that the right hon. Gentleman has seen these documents and that he shares my concerns. I believe that the right hon. Member for Birmingham, Hodge Hill, should he have the privilege of being called to speak, will talk further on that point and make reference to these files.

Christopher Chandler’s personal file is marked “File code S”, a DST marker indicating, if I understand correctly, a high or higher level of threat to France. In France, the letter “S” is now used to designate radical Islam. In Monaco then, it was used to designate counter-espionage. As I have said, Mr Speaker, I believe that other Members, if you wish to call them, may cite further details—the right hon. Member for Birmingham, Hodge Hill, the hon. Member for Rhondda, the right hon. Member for Exeter or my hon. Friend the Member for Gravesham.

I wish to state explicitly that I make no criticism of the staff at Legatum, nor those people who have engaged with its charitable work, nor members of the public, nor, clearly, Members of this House who have dealt with this institution. I have thought long and hard before making this statement, but I have done so because I believe, and the five of us believe, that it is in the national interest to do so. If people like Mr Chandler are vulnerable to malign influence—maybe he is an innocent party in this, who knows?—especially if the information on them is covert, that matters to our democracy.

In November 2017, the Prime Minister highlighted the danger from Russia of subversion. I take my lead from her when she said that the Russian regime was trying to “undermine free societies”. I also read the excellent piece in The Sunday Times this weekend looking at how Russian bots may have manipulated elections. One of the problems in elections is that if they are manipulated successfully, the winning side does not want to know and the losers plead sour grapes, so the answer is to do what we can to strengthen our electoral system before it is too late.

[Chris Bryant]

I commend the hon. Gentleman for what he has said and fully concur with what he has argued—I have seen the papers as well and I have come to the same conclusion as him. Does he think that the Magnitsky clause will make a significant difference in our being able to tackle this kind of hidden pervasive influence in British society and British politics?

[Mr Seely]

Anything that helps us is important because we need to keep our society free of covert and malign influence. I was in the States last week, as the hon. Gentleman knows, and I am working with Congressmen there and in Canada, Australia and New Zealand, so that we can combine best practice. That is important because a counter-propaganda Bill is going through the United States Congress—do we need that here, etc.?

If I see information of this kind, I have a choice: I can disregard it and become complicit or, if it is genuine, I can put it in the public domain. It might be that Committees will wish to have access to this information, and I suspect that those who have it will provide it to any of the six Committees investigating Russia, if they wish to do so. It might be that Mr Chandler can provide a satisfactory explanation or argue that these relationships, if they existed, are now historical or have been misrepresented in the documents. I do not use privilege lightly, Mr Speaker. He might wish to offer evidence, written or oral, to any of those six Committees, whose work I am supporting, in a modest way, as secretary to the Russia steering group. I look forward to his response— I am quite sure there will be one.

I will be writing to the Prime Minister in the coming weeks to suggest further measures to strengthen our democracy and electoral system. The struggle of our generation is how we deal with authoritarian states and their actors, official or proxy, who use free and open societies to damage those free and open societies. We need to do something about it. Increasingly, Members now see that covert malign influence from authoritarian states, most commonly our friends in the Kremlin but also elsewhere, is a real and present danger to our nation, to our financial system—hence this debate—and to the transparency of our democracy and electoral system, not to mention the Kremlin’s ability to conduct acts of violence and murder on our soil. We have a duty to speak up and to use this House for the public good. That is what I am doing now.

[Several hon. Members rose—]

[Mr Speaker]

Order. I want to call several more colleagues and therefore there is a premium upon brevity.

[Jo Swinson]

Having listened to various hon. Members refer to the excellent briefing by Transparency International UK, I should declare an interest, as I am married to its director of policy—the briefings really are excellent.

Turning first to the Magnitsky amendments, I welcome Government amendments 10 and 13, which reflect the Prime Minister’s commitment of 14 March. After Second Reading, many of us felt rather less confident than previously that they would be forthcoming, so I am glad that the Government have brought them forward, given that the issue has been raised repeatedly. I am particularly reassured by the Minister’s confirmation that the lists of people sanctioned will be put in the public domain for anybody to see. I agree with others that that is a very important deterrent.

The importance of human rights and the part that our country plays in upholding them internationally cannot be overstated—they are vital. The hon. Member for Glasgow Central (Alison Thewliss) set out the horrendous case of Sergei Magnitsky and the horrendous lengths to which oligarchs will go to protect their ill-gotten gains. I was reminded, on the wider issue of corruption, that we are talking about not just numbers on spreadsheets, but people’s lives—this is literally a life and death matter. I recall planning a visit to Russia to investigate human rights abuses in Chechnya. We had to postpone the visit because the individual we had been organising it with, Natalya Estemirova, who was from a human rights organisation, was assassinated.

That followed the murder of the journalist Anna Politkovskaya, and last October we were shocked by the murder in Malta of the investigative reporter Daphne Caruana Galizia. These people were murdered for investigating and exposing corruption and human rights abuses. I was particularly pleased to see the launch of the Daphne project in tribute to Daphne, with 45 reporters from 15 countries carrying on her work so that her stories will live on. One of the most powerful ways to send a message to anyone who would seek to silence those trying to uncover corruption is to make sure that what they were uncovering is finally exposed.

The Minister mentioned the consultation that was launched yesterday on Scottish limited partnerships. The very real problems that have arisen under those partnerships have been in the public domain for more than 18 months, and given that we as a country have been trying to lead on this in recent years, we need to be moving with much more alacrity. The hon. Member for Glasgow North East (Mr Sweeney) made an incredibly important point about enforcement. We need to ramp up Companies House’s ability to investigate, and that requires resources. Very good people there are trying to do a very good job, but given that 17,000 Scottish limited partnerships were registered to just 10 addresses, there are questions to be asked about how risk-based investigation and digital tools could be improved.

15:45

We know that when someone registers a company name that contains one of 135 sensitive words, it is automatically flagged up and examined in more detail. Those words range from “royal” and “Windsor” to “institute” and “midwife”. Perhaps it would be possible to expand the same facilities to create a risk profile of other suspicious activity that needs to be examined in much greater detail, while not making it difficult for people who want to set up companies entirely legitimately to do so. More could definitely be done in that regard.

We have discussed the key issues of beneficial ownership, public registers and the overseas territories, but again the Government have delayed, and that has been the hallmark of their approach. Although the issues were well aired in the House of Lords, and in this place on Second Reading and in Committee, the Government made a rather late attempt this morning in tabling their amendments. I must confess that that screamed out at me as a tell-tale sign of a Government who were afraid that they might lose a vote. None the less, I welcome their acceptance of new clause 6. I pay tribute to the work of Members on both sides of the House, including the right hon. Members for Barking (Dame Margaret Hodge) and for Sutton Coldfield (Mr Mitchell).

[Hannah Bardell]

Does the hon. Lady agree that it is disappointing to hear Conservatives saying that the money will move elsewhere? If we do not make a start, how will we move forward? The gender pay gap reporting has done exactly that.

[Jo Swinson]

I concur absolutely. The fact that we cannot solve this problem in every single jurisdiction in the world does not mean we should not do what we can in those areas where we can have influence. We should certainly be using our diplomatic influence to try to expand the use of public registers in other countries, but we should also be setting our own house in order, because if we do so, we will have more legitimacy and credibility when we urge other countries to follow suit.

The United Kingdom is trying to take a leadership role on this issue, and that is important. That dates back to 2013, when the then Prime Minister, David Cameron, set out the Government’s plans at the G8 summit and was aiming to secure international agreement through the anti-corruption plan. I was delighted to play a role as a Minister in the introduction of measures on beneficial ownership and the public register in this country through the Small Business, Enterprise and Employment Act 2015. There was also an anti-corruption summit in 2016. However, there has been delay since then. At that time, the Government committed themselves to legislate to increase transparency in the housing market and to require overseas companies that owned property to declare their beneficial ownership publicly. That was supposed to be in place by April, but now it, too, has been delayed. We will not see even a draft Bill until the summer, and we will not get the actual legislation until next year.

The issue of the overseas territories really matters. More than three quarters of corruption cases involving property that were investigated by the Met’s proceeds of corruption unit involved anonymous companies based in secrecy jurisdictions, and nearly four fifths of those were registered in either the overseas territories or the Crown dependencies. As I have said, it is important that we get our house in order. Conservative Members have said we should try to do that through consensus but, as I pointed out in an intervention, the Government have been attempting to do that with various levels of enthusiasm over the last five years yet the registers have remained firmly private.

What we are talking about is an international crime. It is not victimless. We are talking about corruption that has a very serious impact on vulnerable people in countries throughout the world. Money is siphoned off through corrupt means and denied to the populations of those countries when it should be funding public services and enabling individuals to be looked after. That has an impact on the UK’s own reputation as well.

It is worth recognising the significant role of the overseas territories. In the Panama papers, the British Virgin Islands was the most popular tax haven mentioned, and Bermuda is No. 1 on Oxfam’s list of worst corporate tax havens. That is why it is important that we act. The right hon. Member for Sutton Coldfield rightly explained the challenges involved in including the Crown dependencies under new clause 6 and the specific relationship levers that we have as a country. Nevertheless, I hope that, having accepted the new clause, the Government will be enthusiastic about pursuing the same issues with the Crown dependencies to ensure that they follow suit. They should definitely be required to publish such a register so that the UK can show global leadership on this issue.

[Richard Benyon (Newbury) (Con)]

My experience of the House leads me to conclude that when somebody pays a Member a compliment, they should bank it and move on. However, although I am grateful to the Minister and the hon. Member for Bishop Auckland (Helen Goodman), it is important to say that a lot of people have worked on the Magnitsky amendment or law, as it has come to be known, many of whom sit on the opposite side of the House. Many of them have also been involved in this matter for a lot longer than I have, but I do stand to speak in support of new clause 3.

[Robert Neill]

I welcome everything my right hon. Friend has done around the Magnitsky law and the fact that the Government have accepted it. Is he aware that the Government and Parliament of Gibraltar have already introduced a Magnitsky law, which indicates their willingness to be ahead of the game, rather than having to be dragged forward?

[Richard Benyon]

Then they should feel extremely virtuous. It is important that we recognise that we are today putting in place something that already exists in a number of other legal jurisdictions—the Baltic states, the United States and Canada. A number of other countries are looking to do this, too.

David Cameron has been mentioned a lot today, and his commitment on this matter has been vital. In a recent speech to Transparency International he said:

“One of my regrets of my time in office was that we didn’t introduce the Magnitsky Act. The Foreign Office argument was that Britain’s existing approach was better, because we could sanction all the people on that list—and more besides. And I went along with it.

But I soon realised this ignored the advantages of working together—with other countries—under a common heading. It’s not PR, it’s a fact. You get extra clout from coming together across the world and saying with one voice to those who are responsible for unacceptable acts: ‘We are united in our action against you.’”

He then paid tribute to his successor as Prime Minister and to Parliament for passing the provisions in the recent Criminal Finances Act 2017, and also referred to a person who deserves mention in this House today. Bill Browder, along with others, has put himself at huge risk to make sure that those who murdered his lawyer and friend Sergei Magnitsky are not able to travel around the world, bank, buy property and operate in a manner that we rightly take for granted in this country but should be denied to people who have behaved in that way. If we remember anyone today, we should think of the piteous image of Sergei Magnitsky after months of imprisonment. He was extremely unwell and then beaten to death by thugs at the behest of people who have still not been held to account. Today we are saying to them, “Not in our country are you going to be able to do business,” and we should feel proud of that.

In an act of extreme serendipity, I found myself on the Bill’s Committee. I am extremely grateful to members of that Committee, to the Minister and his officials, and subsequently, in recent weeks after the Salisbury incident, to the Prime Minister for absolutely accepting that we need to have what will be known as the full Magnitsky. We went a considerable way towards that a year ago with the Criminal Finances Act, but are now in a position to say that we are in accordance with the Magnitsky provisions of other countries. It is important that we get the definitions right—I do not think that we got there in Committee—but to now have a definition of gross human rights abuse that is in accordance with the Proceeds of Crime Act 2002 is important.

My brief comments today will be about what Parliament does now, because the Bill is gratifyingly loose in its description of what kind of review mechanism Parliament will impose. This is crucial. In recent days, I have had useful discussions with Committee Clerks, the Chairmen of the Liaison and Procedure Committees and a number of others about what kind of structure we could create in accordance with the Bill to allow individuals—Members of this House, members of organisations such as Amnesty International or Bill Browder’s, or any individual—to say to the Government, “We have evidence that these people have done this and should be sanctioned.” The Government will produce a report to Parliament every 12 months setting out who has made representations to them. In an important response to the hon. Member for Aberavon (Stephen Kinnock), the Minister made a clear assertion that the names on the sanctions list will be made public. That is important.

[Mr Jonathan Djanogly (Huntingdon) (Con)]

I have to say that the Minister did not go into very much detail in his excellent opening remarks about what would be in the report proposed under new clause 3. If my right hon. Friend has had discussions with him on that, it would be interesting to hear about them. If not, it would be interesting to hear more from the Minister later on.

[Richard Benyon]

We have it in our power to create something in Parliament that will hold future Governments as well as this Government to account. I am full of respect for what our security Ministers have been doing recently to freeze the bank accounts of certain individuals, and I absolutely believe that the Government have the will to ensure that we get our economy sorted out so that we cannot be a safe haven for these people. However, what we are talking about will be happening way into the future. It will affect future Governments as well, and we must hold them to account.

We could put this in the hands of an existing Committee —perhaps a Select Committee—but I suggest that that might not be the right framework. A Select Committee has the specific role of holding a Department of State to account and looking into certain details. I personally like the idea of a bespoke Committee that would draw together members of different Committees. The example that I would throw out there for others more important than me to grab is the Committees on Arms Export Controls—the CAEC. It has a specific remit, with members from various Select Committees, and I think it would be an effective model.

[Helen Goodman]

May I urge the right hon. Gentleman to read new clause 10, which sets out a proposal for a scrutiny Committee?

[Richard Benyon]

Well, I have. I just think new clause 3 leaves it much more open for Parliament to make a decision, and I am quite content with that, although I am open to other suggestions. Some people say that the Joint Committee on Human Rights might be best placed to carry out this scrutiny, but I see, from delving into the Standing Orders, that Standing Order No. 152B(2)(a) states that the Joint Committee has a remit to look at

“matters relating to human rights in the United Kingdom”.

What we are talking about here is matters relating to human rights anywhere. We could be talking about someone who is evicting the Rohingya, for example, or actions taken in conflicts or situations as yet unknown and unforeseen. We need to ensure that we can look at human rights everywhere.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

As a member of the CAEC, I urge the right hon. Gentleman to think again about using it as a model for a scrutiny Committee. I sit on it, and it struggles to function—it did not meet for two years—but one thing that it did recommend was a measure to allow the Government to shut down brass-plate companies, on which I have tabled an amendment in the next group.

[Richard Benyon]

I understand the point that the hon. Gentleman is making. I am not completely wedded to that idea. I simply say that this is in our grasp—this is now Parliament’s duty. Following the very good discussions that I have had with my hon. Friend the Member for Totnes (Dr Wollaston), the Chairman of the Liaison Committee, and my hon. Friend the Member for Broxbourne (Mr Walker), the Chairman of the Procedure Committee, as well as with other wise heads and people with much more experience than I have, I know that we need to design something that really works. The crucial thing that works in Congress and in other Parliaments is what is known in the United States as the “congressional trigger”, under which it is possible to really ask questions of the Executive. Through the measure that we are discussing today, the Executive are giving Parliament the power to get this right, and we must take that duty very seriously.

[Liam Byrne]

I want to make two points in support of new clause 6 and to encourage the Government to take on board the arguments made by my hon. Friend the Member for Bishop Auckland (Helen Goodman). I also want to put on the record my tributes to my right hon. Friend the Member for Barking (Dame Margaret Hodge), the right hon. Member for Sutton Coldfield (Mr Mitchell) —my constituency neighbour—and the others associated with this step forward.

16:04

I want to draw out the argument made by the right hon. Member for Sutton Coldfield, because I thought he would say a little more about the importance of new clause 6 to the development agenda that he and others have championed over many years. It is sometimes possible for Governments to will the ends, not the means, and I fear that this could be one of those cases. For all the economic gains of the past 30 years, the truth is that they have not been shared fairly. The top 1% now hold something like half of world wealth, and if that lucky, privileged few continue to amass wealth at the pace we have seen since the financial crisis, they will control two thirds of global wealth by 2030, so we are at a tipping point. If we do not make a change now, it will be difficult to restore a measure of equality over the course of this century.

Now, I do not think that Her Majesty’s Government want that outcome, which is why they signed up to the sustainable development goals in 2015 and why they agreed to the G20 communiqué at Hangzhou in 2016 that said the world should work together to develop measures for more inclusive growth. However, at the spring meetings in Washington a couple of weeks ago, the president of the World Bank made clear what it will take to deliver that, saying, “Look, once upon a time the World Bank would say, ‘We need to develop and invest in infrastructure and infrastructure alone, but that is no longer good enough. We have to invest in infrastructure and health and education.’” To do that, however, requires developing countries to mobilise something like 15% of GDP. Those countries have tax bases of just 5% of GDP, so if we are to finance the bridge—the missing 10%—we have to strip away the layers of protection around tax havens that allow corrupt companies and individuals to salt away, like an old pirate treasure, the money that is vital to closing the development gap and delivering the sustainable development goals by 2030.

My second point is about national security. We have heard several arguments this afternoon about why it is terribly important that we step super-cautiously around the constitutional privileges that we have granted to overseas territories and Crown dependencies. I respect that argument, but the reality is that money squirrelled away in those places is now being used to enable the undermining of our constitution. Therefore, if we want to drive forward the rules-based order that Her Majesty’s Government are keen to champion, we must act against the enablers of attacks on this country’s sovereignty and integrity.

[Mr Cox]

It is perfectly within our power—the Government have committed to do this—to institute a public register that requires the beneficial owners of any overseas entity wishing to own property in this country to be declared in public. We can do that as it is part of our jurisdiction. However, does the right hon. Gentleman not see that the step that is now being taken goes much further than that and requires the overseas territories to make things public even in relation to property that is not owned in the UK?

[Liam Byrne]

That is absolutely what I am proposing, and my reason is this country’s national security. Let me give the hon. and learned Gentleman a simple example. Back in November 2017, my right hon. Friend the Member for Exeter (Mr Bradshaw) raised the issue of some significant agents of influence in this country: the Chandler brothers, who happen to run an important think-tank that has enjoyed unrivalled access to Ministers during one of this country’s most important national debates. The risk—I put it no stronger than that—that we are running is that that support is financed from sources that derive from the Russian Federation, and it may therefore be part of the panoply of active measures that have been drawn together since the re-election of President Putin in 2012. He has made no secret of that. He set it out in a state of the union address to the Russian people in 2013. Some call it the Gerasimov doctrine, but, whatever it is called, we saw the sharp edge of that sword on the streets of Salisbury just a few weeks ago.

I want to give the House an example of how this influence can unfold in an innocent country like ours that has perhaps been a little inattentive to some of the risks that have been growing over the past few years. As the hon. Member for Isle of Man has mentioned—[Interruption.] As the hon. Member for Isle of Wight (Mr Seely) has mentioned—he would have a different kind of specialism if he were the hon. Member for Isle of Man—the individuals to whom he referred are men of influence who help to finance an important think-tank.

I note with interest that the think-tank is financed by the Legatum Institute, which is registered in the Cayman Islands—registration number FC028686, for those who take an interest in these things—but why should these brothers be of such interest to us? Well, we know that Christopher Chandler and his chief executive, Mark Stoleson, have both taken Maltese passports through the passport-selling operation Henley & Partners. They both publicly accept that they hold accounts at the Iranian-Maltese bank Pilatus, the assets of which were frozen and its chairman arrested at the behest of the FBI in March. Both Pilatus and Henley & Partners were the subject of investigations by the Maltese journalist Daphne Caruana Galizia, who was assassinated late last year.

The hon. Member for Isle of Wight has referred to more. Richard Chandler’s file contains the additional statement:

“Richard Chandler and his brother Christopher play an important role in the capital of the companies Lukoil and Gazprom (linked to longstanding…Russian figures who could be linked to organised crime).”

Furthermore, they maintain relations with an individual, a Chechen mafia figure, who was “expelled from Monaco”. They are connected with money laundering. These allegations are made in the file.

[Mr Bradshaw]

Is my right hon. Friend also aware of the relationship between Henley & Partners and the social media data companies that have been allegedly involved in helping with political campaigns, including that of the recently elected Government in Malta?

[Liam Byrne]

These are very real and very serious allegations, yet when I tabled questions to the Treasury about whether it was exploring the Maltese golden visa route, and the access to the European banking system and the Schengen area that it provides, it said no such conversations were under way.

The point is that I would like to know more about these brothers and whether they are beneficiaries of the money knocking around the overseas territories that derives from bad sources. I want to know whether that money is derived from Russian sources, and I want to know who the business partners were.

Global Witness has done this House an incredible service by highlighting how £68 billion of Russian money is now sloshing around the overseas territories. Given the national security situation that now confronts us, and given the update to the national security strategy that has just gone through, how can we be relaxed about our ignorance of where that £68 billion of Russian money, now buried safely and securely in the overseas territories and Crown dependencies, came from?

If there is innocence, it should be proved. It should be clear. That is why the disinfectant of sunlight is so important. What we cannot have is agents of influence peddling policies and proposals backed by dirty money from one of our country’s enemies. We cannot have that, and we in this House have a responsibility to ensure that we do not run that risk.

For far too long, good and bad money has been allowed to mix together in our overseas territories and Crown dependencies. There is good money there, but we need to be honest with ourselves that some of that money comes into too close contact with cash generated by economies of evil. It is our responsibility to take steps to shut down that regime, which is why new clause 6 and the arguments of my hon. Friend the shadow Minister are so important. I hope the Minister will listen.

[Mr Djanogly]

First, let me join many hon. Members in congratulating the Government and, in particular, the Minister on building a consensus within the parties and among hon. Members on the Magnitsky provisions, which I wish to speak to today.

Time is short, so I will make only a few brief points. On whether these powers are actually going to be used and on the methods of use, I do not yet see any significant change of Government policy. However, if this debate is going to be the herald of a new-found dynamism to clear the UK of the £90 billion of black money flowing through our banks, real estate market, private schools, Bond Street and the rest, I would certainly very much welcome that. My question is: will action now follow the law? I will be interested to hear whether the Foreign Office has had words with the Attorney General, the Home Office or other Departments in that regard—is there a strategy?

On the Government amendments, I see that new clause 3 provides for a reporting system for human rights violation-related sanctions. That is welcome, but my reading of this provision is that it is a retrospective check on what the Government have done and not so much on what they intend to do—if I am wrong on that, I would be grateful if the Minister would clarify the position. The measure in itself is commendable, and I agree that if the report is a sparse one, it would imply and provide evidence to support claims that the Government should be doing more. However, I was very pleased to hear the Minister suggesting today that we are also to have a list system that will be updated on an ongoing basis for those subject to sanctions, as this approach has clearly been so effective elsewhere. Having said that, will the Minister confirm whether people to whom the relevant sanctions have been applied would also need to be listed in the Government new clause 3 report? I believe the answer is yes, but I would be grateful if he would clarify that. Even if there is to be a running administrative list, it would be helpful to have the names set out in the report, with reasons given and an assessment.

There is another related issue here. Could the Minister confirm whether the visa bans attributed to section 1 -type sanctions would also be listed in the new proposed report? Again, maintaining the current system of secret visa bans is simply not as effective as people knowing that their lack of welcome here will be made public in a Magnitsky-list fashion. What these people fear, every bit as much as receiving a visa ban, is other people knowing about it.

My final point is that although this Bill creates a new post-Brexit framework for sanctions, it does not actually set out our policy for how sanctions will be considered or implemented on a multinational basis, which everyone agrees is the most effective approach, as has been said by my right hon. Friend the Member for Newbury (Richard Benyon). So will the Minister explain how these sanctions provisions would be considered within the European Union after we have left it? For instance, is consideration being given to setting up a new co-ordinating committee within the EU? In various speeches I have read, it seems clear that the EU will continue to wish to work closely with the UK on external security matters, so there seems to be goodwill to that end. I would be interested to hear more on how we propose that decision making on sanctions will be put into an institutional context.

We have mainly discussed Russia today. It is worth mentioning that the US aluminium sanctions on Russia were put in place only a few weeks ago, and I have since heard of a degree of kickback from other countries such as Germany and other negatively affected parties. Clearly, if we are going to get tough on sanctions, it will be important to continue to present a united front. So we are seeing progress, but ultimately this will need to be proved by a better UK record of sanctions, visa bans, asset seizures and active prosecutions. Will the law be backed by action? The days of the UK being a dumping ground for illegal black money need to come to an end, and I hope that this Bill will act as a spark to get the process moving.

[Chris Bryant]

I shall be brief, Mr Speaker. Several hon. Members have spoken about the dangers of our legislation meaning that dodgy money will leave the overseas territories and go to some other kind of territory. First, that will probably be a good thing for each of those territories. Secondly, and far more importantly, all too often the way we have run our affairs in this country, and how our overseas territories have run theirs, has meant we have been a magnet for that money. For a series of different reasons, rich people who have stolen money from their own people like having it squirreled away here or in our overseas territories or, as is normally the case, in a mixture of the two. That is because they like to send their children to our expensive schools; because they like to go shopping in the UK; because, ironically enough, they like to enforce their contracts in law in British courts; and because they know that the whole system of financial and land registration in this country is relatively weak. That is why I warmly welcome the changes we are going to bring about.

16:14

In the end, money and assets are only ever hidden from public sight either because they have come from some illegal source in the first place, or because somebody is trying to prevent the legitimate authorities in other countries from taxing or taking them. Public registers are the only way to make sure that what is on a register is verifiably true and correct. The public are often a much better investigator than the investigating authorities, which simply do not have the time or the resources to do the job fully, as we have seen from the Paradise papers and in other ways recently.

Over the years, I have asked a Prime Minister—one or other of them—32 times for a Magnitsky provision. Perhaps, in the end, one has to get Conservatives on board. Perhaps it is good to have Conservative friends. Many Conservative Members, including some who are not present because they are Ministers, such as the hon. Member for Esher and Walton (Dominic Raab), and particularly the hon. Member for Huntingdon (Mr Djanogly), who just spoke, have been adamant in their pursuit of this matter. They have been very clear and sometimes courageous in trying to tell their Government that we need to act. Ironically, on 7 March 2013 the House agreed unanimously that we would bring in a Magnitsky measure; I am glad that we are now finally going to do it.

The hon. Member for Isle of Wight (Mr Seely) referred to Richard and Christopher Chandler. I have seen the documents as well, and it is important to bear in mind that at the heart of them is an allegation of money laundering. It is about taking money that has come from decidedly dodgy sources—often stolen from the Russian people—and cleansing it, as it were, through the system so that it can be used for other illegitimate means. The fact that that has infected our country’s political system should be a matter of concern for us all.

In the end, I see this all in the context of our relationship with the Russian Federation. I have been concerned for some time that we tend to take two steps forward and one step back, or sometimes one step forward and two steps back. After the Salisbury incident, it was great that the Prime Minister managed to secure such a strong backing from so many countries around the world for the expulsion of so-called diplomats, but if we do not match that action with action on financial liberality and people’s ability to slosh their dirty money around other parts of the world, the Russians simply will not take it seriously. It is interesting that the American sanctions on Oleg Deripaska have for the first time made him start to retreat from various different markets, including with En+, a business that frankly should never have been registered in this country in the first place.

[Liam Byrne]

Does my hon. Friend agree that the next big international opportunity to make progress on this issue is the G20 in November? If we are to help to lead the argument, we must have the moral credibility of having taken action ourselves.

[Chris Bryant]

I completely agree, and that is also why I agree with the kind of approach that the hon. Member for Isle of Wight tried to enjoin on the whole House—not only on those from different political backgrounds, but also on all the different silos, including defence, foreign policy, work and pensions and the Treasury—to try to make sure that we have a united, coherent, consistent and, to use a valleys word, “tidy” approach towards the Russians. That was not “a valet’s word”, but a valleys word—[Laughter.]

[Richard Benyon]

Language is really important, and I know that the hon. Gentleman will agree that when we talk about Russia’s malign influence, we are talking about the Russian regime and the coterie of criminals that surrounds it, of which the Russian people are the victims. The Magnitsky amendment we will pass today is the most pro-Russian piece of legislation that we can pass.

[Chris Bryant]

I agree; I do not think that there is a single Member of this House who does not have profound respect for the people of Russia and for the country of Russia, and for what it has given to us culturally and in so many other ways over the centuries. But what a pain it is to us to see a country that was reaching out for liberty suddenly find itself crushed under the heel again. It is a country that should be one of the great advancing economies of today, but it is in stagnation, with barely 1% growth. That is why all of us, from all parts of this House, have campaigned to take a robust attitude to Russia.

Finally, the Russian ambassador tweeted the other day that he wants to meet the all-party group for Russia, which I chair. He is not answering his phone—I am not sure whether he is busy on something else—but we will have him next Wednesday afternoon at 2.30 pm if anyone wants to hear his view of things.

[Nick Herbert (Arundel and South Downs) (Con)]

I was pleased to add my name to new clause 6, and I congratulate the right hon. Member for Barking (Dame Margaret Hodge) and my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) on bringing it forward. I will not repeat the powerful arguments that have been made for transparency today—they were also well made on Second Reading—other than to say that progress has been made in the overseas territories. Central registers have been introduced, but that is not sufficient for the reasons that have been given. We need that transparency to shine a light on what is happening. I suspect that there has been relatively little interrogation of the central registers by law enforcement authorities. There also needs to be a step up in law enforcement action as well as in these measures.

Two principal concerns were adduced to explain why we should at least hesitate before we compel the overseas territories to act. The first is the potential economic damage to the overseas territories. I argued strongly on Second Reading that that should not be an impediment to act. It can never be an argument that, where something wrong is being done, we fail to act simply because there might be some economic consequences. We do, however, have a duty to ensure that those economic consequences are addressed and that we help to mitigate them.

In accepting the new clause, there is a strong responsibility on this House, and now on the Government, to ensure that there is no damage to the economies of the overseas territories for taking action, especially as they may now be taking it more rapidly than they wished to, particularly when we consider, for instance, the impact of the hurricane damage on the British Virgin Islands. That concern should not prevent action, but it should be taken seriously.

The second concern is the constitutional objection: is it right for us to intervene? That is a serious argument. Again, on Second Reading, I argued that if the harm that is being done is so great that it can no longer be ignored, there is a justification to act, and there clearly is a power to do so. These are not just domestic matters for the overseas territories in which we have decided to intervene; they have a global impact. It is therefore very important for the Governments of the overseas territories to understand the reasons why this House has felt it so important to move. If they can act voluntarily, ahead of any action being taken legislatively, that would be very welcome.

[Robert Neill]

I thank my right hon. Friend for giving way on that important point. Does he accept that it is for that reason, and that reason only, that the Chief Minister of Gibraltar wrote the letter in the way that he did—because it is the constitutional convention that we do not normally legislate without the territories’ consent? And it is for that reason, and that reason only, that the Crown dependencies, which have a good record of compliance, had concerns about this form of legislation undermining the long-established doctrine that we do not legislate for them without their consent. It is not the objective that anyone objects to in any of those jurisdictions, but this should be done through the normal constitutional process.

[Nick Herbert]

The Crown dependencies do not fall within the ambit of new clause 6, as my right hon. Friend the Member for Sutton Coldfield pointed out. They are in a different constitutional position.

The wider point is this: I would have been minded to accept the Government’s compromise amendments and new clauses had the House had the opportunity to consider them. We should have avoided, if at all possible, dictating to the overseas territories what to do, but that option was not available. None the less, I welcome the fact that action is being taken.

In agreeing to new clause 6, the key concession that the Government made was that it was no longer acceptable that the overseas territories should move only at the pace of the rest of the world. As my right hon. Friend the Minister for Europe and the Americas said, the key concession was that he accepted that the will of the House was that the overseas territories should move ahead of the pace of the rest of the world for reasons that have been very well made by Members on both sides of the House. That said, we should not lose sight of the objective here. The objective is not to force the overseas territories to take action, but to ensure that we tackle corruption where we find it, and that has to be done on a global basis.

The arguments that there will be displacement should not be an impediment to action, because we can never argue that we will not tackle a crime on one street corner in case it moves to the next. That can never be a moral argument or a reason not to take action. Nevertheless, it is a serious argument. What are we going to do to avoid displacement? The imperative is therefore on the Government and on this place, which has now forced this action, to support every effort possible to mobilise the global community behind transparency for everyone.

This House and the UK will be taking a lead, and we will be requiring our overseas territories to take a lead, but we now have to step up. That may mean taking initiatives such as having another global summit to encourage action, as the anti-corruption champion, my hon. Friend the Member for Weston-super-Mare (John Penrose), suggested. Whether it is through means such as the G20 or the G7, we must now drive action on a broader basis than simply the overseas territories or the Crown dependencies.

[John Penrose]

I completely back up what my right hon. Friend is saying. The time for global action must be now. We need to use the lead that we will create by imposing this measure to drive and exert a global leadership. It must be about not just the transparency of company disclosures but the transparency of trust disclosures and other kinds of asset classes as well as company shares.

[Nick Herbert]

I agree. In taking this action and ultimately, if necessary, requiring the overseas territories to act, we will be taking a grave step—one that has only been used twice before, in relation to the decriminalisation of homosexuality and to capital punishment. It is a serious move. The justification must therefore be that we use this step to encourage action globally, and that is what I urge the Government to do.

[Sammy Wilson]

On behalf of the Democratic Unionist party, may I welcome the changes that the Government have made regarding the Magnitsky amendment? It is likely to have an impact on those who think that they can get away with human rights abuses and hide behind and use their wealth in the United Kingdom. However, I am disappointed that we have not discussed on the Floor of the House the Government amendment and new clauses that were tabled as alternatives to new clause 6.

I have two main concerns. Coming from Northern Ireland, I know the impact on devolved Administrations of interference in devolved matters by the Government at Westminster, and I also know the impact that this can have on those with nationalist tendencies. New clause 6 presents a real danger in this regard. People have had to do constitutional somersaults in the House today. The Scottish National party, which has vigorously defended the rights and independence of the devolved Administration in Scotland, now suddenly has no difficulty supporting interference in the overseas territories.

[Hannah Bardell]

rose—

[Stewart Malcolm McDonald (Glasgow South) (SNP)]

Will the right hon. Gentleman give way?

[Sammy Wilson]

Let me finish my argument. The point has been made that the SNP has done a constitutional somersault because this issue is of such importance. Well, during debates on the European Union (Withdrawal) Bill, the Scottish National party was quite happy to have things devolved to the Scottish Parliament that could have broken up the internal market of the United Kingdom and affected the economy of the whole country, yet they insisted that it was their right for those things to be devolved. This constitutional somersault indicates that a different attitude has been adopted towards the overseas territories on this issue, and it is an attitude that we will live to regret.

The Minister has said that he will hold the hand of the overseas territories, give them support, encourage them along and give them the opportunity to have a say in what goes into the Order in Council. Nevertheless, those who have already done a lot of what has been asked of them will feel that we have brought down a heavy hand on them.

[Hannah Bardell]

Can the hon. Gentleman name one Scottish policy—just one—that impinges on the human rights or the economy of the rest of the UK?

[Sammy Wilson]

This is the first time we have ever had a qualification put on the Scottish National party’s view that devolution is sacrosanct. All through the debates we have had in this House about the sacrosanct nature of devolved Administrations, there has never, ever been a qualification, but today we have the qualification added—

16:30

Debate interrupted (Programme Order, this day).

The Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the clause be read a Second time.

Question agreed to.

New clause 3 accordingly read a Second time, and added to the Bill.

The Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).

New Clause 6

Public registers of beneficial ownership of companies registered in British Overseas Territories

‘(1) For the purposes of the detection, investigation or prevention of money laundering, the Secretary of State must provide all reasonable assistance to the governments of the British Overseas Territories to enable each of those governments to establish a publicly accessible register of the beneficial ownership of companies registered in each government’s jurisdiction.

(2) The Secretary of State must, no later than 31 December 2020, prepare a draft Order in Council requiring the government of any British Overseas Territory that has not introduced a publicly accessible register of the beneficial ownership of companies within its jurisdiction to do so.

(3) The draft Order in Council under subsection (2) must set out the form that the register must take.

(4) If an Order in Council contains requirements of a kind mentioned in subsection (2)—

(a) it must be laid before Parliament after being made, and

(b) if not approved by a resolution of each House of Parliament before the end of 28 days beginning with the day on which it is made, it ceases to have effect at the end of that period (but without that affecting the power to make a new Order under this section).

(5) In calculating a period of 28 days for the purposes of subsection (4), no account is to be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days.

(6) For the purposes of this section, “British Overseas Territories” means a territory listed in Schedule 6 of the British Nationality Act 1981.

(7) For the purposes of this section, “a publicly accessible register of the beneficial ownership of companies” means a register which, in the opinion of the Secretary of State, provides information broadly equivalent to that available in accordance with the provisions of Part 21A of the Companies Act 2006.”

This new clause would require the Secretary of State to take steps to provide that British Overseas Territories establish publicly accessible registers of the beneficial ownership of companies.—(Dame Margaret Hodge.)

Brought up, and added to the Bill.

New Clause 19

Scottish Limited Partnerships: UK bank account requirement

‘(1) For the purposes of preventing money laundering, where a limited partnership registered in Scotland has general partners at least one of those must have an active UK bank account.

(2) Where a limited partnership registered in Scotland has limited partners at least one of those must have an active UK bank account.

(3) In this section—

a “limited partnership registered in Scotland” means a partnership registered under the Limited Partnerships Act 1907;

“general partner” has the meaning given in section 4(2) of the Limited Partnership Act 1907;

“limited partner” has the meaning given in section 4(2A) of the Limited Partnership Act 1907.”—(Alison Thewliss.)

Brought up.

Question put, That the clause be added to the Bill.

16:31

Division 143

Ayes: 301

---

Labour: 246
Scottish National Party: 32
Liberal Democrat: 10
Plaid Cymru: 4
Independent: 3
Green Party: 1

Noes: 314

---

Conservative: 303
Democratic Unionist Party: 10
Independent: 1

[Mr Cox]

On a point of order, Mr Speaker. As you know, at the conclusion of the debate on the amendments, I informed you that I wished to raise a point of order. I intervened on several occasions in the debate and I should have made it clear—as I would had you called me to speak—that I have on occasions practised in some of the Caribbean countries that formed the basis of our discussion in my capacity as a member of the Bar. I have done that for more than 20 years and I have a familiarity with those jurisdictions as a result.

The other matter I wish to raise is that before the commencement of the debate you informed us that you were not able to select the Government amendments. Can you clarify whether it was open to you to select those amendments, because you mentioned also that they had been submitted late? So that there should be no misunderstanding, especially outside the House, will you confirm that it would have been open to you, even though they were submitted late?

[Mr Speaker]

Yes. I do not wish to be unkind to the hon. and learned Gentleman, but—uncharacteristically for someone who is normally as fastidious and precise in his use of language and exegesis of what others say—he errs in quoting me. He said that I had indicated that I was not able to select the amendments. I accept that the error is inadvertent and not deliberate, but I never said that I was not able to select the amendments. I said at the outset that I had decided not to use my discretion to select the late starred new clauses and amendments from the Government, which were tabled yesterday afternoon and appeared in print for the first time only this morning. I absolutely accept that I have discretion in the matter, and I used that discretion as I thought right.

As for the other part of the hon. and learned Gentleman’s point of order, he was being most courteous in advising the House of that matter, but—and I do not mean this in any sense discourteously—I think it would be true to say that he was more interested in what he had to say to me and to the House than anything that I might have to say to him on the subject. He has made his point with force and clarity and I thank him for doing so.

[Hannah Bardell]

On a point of order, Mr Speaker. I seek your guidance. New clause 6 has just passed in a spirit of cross-party co-operation. I find it interesting that the right hon. Member for East Antrim (Sammy Wilson) spoke so vigorously against the new clause. What can we do to ensure that Members who speak so vigorously against an amendment put their money—as we know, the DUP have rather a lot of it—where their mouth is, proverbially speaking?

[Mr Speaker]

That is a somewhat tendentious attempt at a point of order, which is rather revealed by the hon. Lady’s grinning visage. The convention in this place is that votes should follow voice. Votes should not be in opposition to voice, but as to how the hon. Gentleman voted I do not know. If the hon. Lady is suggesting that he spoke on the matter in one direction and then did not vote, that is entirely up to the hon. Member. The hon. Member has not behaved improperly. The hon. Member may have irked the hon. Lady, but that is another matter. If it was in relation to an amendment on which there was no vote, there is nothing to be said—that is no matter for the Chair.

[Toby Perkins]

On a point of order, Mr Speaker. I made the hon. and learned Member for Torridge and West Devon (Mr Cox) aware, as is the convention, that I intended to raise a point of order about the fact that he spoke very passionately in favour of the Cayman Islands when he has clearly, according to his own entry in the Register of Members’ Financial Interests, done a lot of work on their behalf. That seems to have given him the opportunity to respond in advance to my point of order. Can you advise me, Mr Speaker, whether, on drawing the attention of the House to a particular entry, it makes any difference if a contribution is an intervention or at the start of a grandiose speech?

[Mr Speaker]

I would not refer to a speech as grandiose—that is the hon. Gentleman’s choice of language—but the short answer is no. If a Member is intervening in a debate, whether by intervention or in the form of a full- blooded speech, the responsibility to declare an interest is unchanged. I feel that the hon. and learned Member for Torridge and West Devon (Mr Cox) has clarified the position, which I think is appreciated, and I would like to leave it there. I thank him for what he has said.

[Luke Graham]

On a point of order, Mr Speaker. Today is the 311th anniversary of the signing of the Act of Union between England, Wales and Scotland. May I seek the Chair’s advice on how we might mark this momentous occasion?

[Mr Speaker]

I think the hon. Gentleman has achieved his objective. I gently point out that I still have propositions to put to the House and there is not a huge amount of time for the second group. I hope that that is the end to points of order. I thank the hon. Gentleman for what he has said.

Amendments made: Amendment 10, page 2, line 11, clause 1, at end insert—

“(ea) provide accountability for or be a deterrent to gross violations of human rights, or otherwise promote—

(i) compliance with international human rights law, or

(ii) respect for human rights,”.

This amendment makes clear that sanctions regulations can be made for the purpose of preventing, or in response to, a gross human rights abuse or violation.

Amendment 11, page 2, line 12, leave out “and human rights”.

This amendment is consequential on Amendment 10.

Amendment 12, page 2, line 16, leave out “human rights,”.

This amendment is consequential on Amendment 10.

Amendment 13, page 2, line 38, at end insert—

“(6A) In this Act any reference to a gross violation of human rights is to conduct which—

(a) constitutes, or

(b) is connected with,

the commission of a gross human rights abuse or violation; and whether conduct constitutes or is connected with the commission of such an abuse or violation is to be determined in accordance with section 241A of the Proceeds of Crime Act 2002.”

This amendment establishes that “gross violation of human rights” includes the torture of a person, by a public official or a person in an official capacity, where the tortured person has sought to expose the illegal activity of a public official or to defend human rights or fundamental freedoms.

Amendment 14, page 3, line 3, after first “to” insert “(e), (ea) and (f) to”. —(Sir Alan Duncan.)

This amendment is consequential on Amendment 10.

Clause 2

Types of Sanction

Amendment made: 15, page 3, line 26, clause 2, after “to” insert “(e), (ea) and (f) to”. —(Sir Alan Duncan.)

This amendment is consequential on Amendment 10.

Clause 28

Review of Regulations

Amendment made: 16, page 22, line 25, clause 28, after “to” insert “(e), (ea) and (f) to”. —(Sir Alan Duncan.)

This amendment is consequential on Amendment 10.

Clause 40

Revocation and amendment of regulations under section 1

Amendment made: 17, page 31, line 39, clause 40, after “to” insert “(e), (ea) and (f) to”.—(Sir Alan Duncan.)

This amendment is consequential on Amendment 10.

Clause 56

Extent

Amendment made: 20, page 43, line 7, clause 56, after first “1”, insert “, section (Public registers of beneficial ownership of companies registered in British Overseas Territories)”.—(Dame Margaret Hodge.)

This amendment is consequential on NC6.

Clause 57

Commencement

Amendment made: 18, page 43, line 31, clause 57, at end insert—

“( ) section (Periodic reports on exercise of power to make regulations under section 1);”—(Sir Alan Duncan.)

This amendment has the effect that the commencement date of clause (Periodic reports on exercise of power to make regulations under section 1) is the day on which the Act is passed.

New Clause 4

Independent review of regulations with counter-terrorism purpose

‘(1) The Secretary of State must appoint a person to review the operation of such asset-freeze provisions of relevant regulations made by the Secretary of State as the Secretary of State may from time to time refer to that person.

(2) The Treasury must appoint a person to review the operation of such asset-freeze provisions of relevant regulations made by the Treasury as the Treasury may from time to time refer to that person.

(3) The persons appointed under subsection (1) and (2) may be the same person.

(4) In each calendar year, by 31 January—

(a) the person appointed under subsection (1) must notify the Secretary of State of what (if any) reviews under that subsection that person intends to carry out in that year, and

(b) the person appointed under subsection (2) must notify the Treasury of what (if any) reviews under that subsection that person intends to carry out in that year.

(5) Reviews of which notice is given under subsection (4) in a particular year—

(a) may not relate to any provisions that have not been referred before the giving of the notice, and

(b) must be completed during that year or as soon as reasonably practicable after the end of it.

(6) The person who conducts a review under this section must as soon as reasonably practicable after completing the review send a report on its outcome to—

(a) the Secretary of State, if the review is under subsection (1), or

(b) the Treasury, if the review is under subsection (2).

(7) On receiving a report under this section the Secretary of State or (as the case may be) the Treasury must lay a copy of it before Parliament.

(8) The Secretary of State may pay the expenses of a person who conducts a review under subsection (1) and also such allowances as the Secretary of State may determine.

(9) The Treasury may pay the expenses of a person who conducts a review under subsection (2) and also such allowances as the Treasury may determine.

(10) For the purposes of this section, regulations are “relevant regulations” if—

(a) they are regulations under section 1, and

(b) they state under section 1(3) at least one purpose which—

(i) is not compliance with a UN obligation or other international obligation, and

(ii) relates to counter-terrorism.

(11) A purpose “relates to counter-terrorism” if the report under section 2 in respect of the regulations indicated that, in the opinion of the appropriate Minister making them, the carrying out of that purpose would further the prevention of terrorism in the United Kingdom or elsewhere.

(12) For the purposes of this section a provision of relevant regulations is an “asset-freeze provision” if and to the extent that it—

(a) imposes a prohibition or requirement for a purpose mentioned in section 3(1)(a), (b) or (d), or

(b) makes provision in connection with such a prohibition or requirement.

(13) If a provision is referred under this section which contains a designation power, any review under this section of the operation of that provision may not include a review of any decisions to designate under that power.”

This new clause requires the appointment of an independent reviewer to conduct reviews of sanctions regulations which impose asset-freezes or similar financial sanctions where the regulations are made for purposes relating to the prevention of terrorism and have been referred to the independent reviewer for review.—(John Glen.)

Brought up, and read the First time.

[The Economic Secretary to the Treasury (John Glen)]

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this it will be convenient to discuss the following:

Government new clause 5.

Government new clauses 15 to 17.

New clause 2—Companies House: due diligence and resources—

“(1) For the purposes of preventing money laundering, the Companies Act 2006 is amended as follows.

(2) In section 1061 (the registrar’s functions) after subsection (1) insert—

‘(1A) Functions directed by the Secretary of State under subsection (1)(b) must include due diligence on a person wishing to register a company.

(1B) In this section ‘due diligence’ has the same meaning as ‘customer due diligence measures’ in regulation 3 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 692/2017).”

(3) In section 1063 (Fees payable to the registrar), in subsection (2)(a) after ‘Secretary of State’ insert ‘including the duty of due diligence under section 1061(1A).’”

This new clause would amend the duties of Companies House to ensure that any person wishing to register a company must be checked for due diligence by Companies House, in line with the measures included in the Money Laundering Regulations 2017. It also ensures that the Secretary of State can charge fees for due diligence checks to cover costs incurred by Companies House.

New clause 7—Money laundering exemptions—

“The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692) are exempted from amendment or revocation under the Legislative and Regulatory Reform Act 2006 and under the European Union (Withdrawal) Act 2018.”

This new clause would prevent any amendment or repeal of the 2017 Money Laundering Regulations via powers contained in the Legislative and Regulatory Reform Act 2006 and the European Union (Withdrawal) Act 2018.

New clause 8—Public register of beneficial owners of overseas entities—

“(1) The Secretary of State must, in addition to the provisions made under paragraph 6 of Schedule 2, create a public register of beneficial ownership information for companies and other legal entities registered outside of the UK that own or buy UK property, or bid for UK government contracts.

(2) The register must be implemented within 12 months of the day on which this Act is passed.

(3) For the purposes of this section ‘a register of beneficial ownership for companies and other legal entities registered outside of the UK’ means a public register—

(a) which contains information about overseas entities and persons with significant control over them, and

(b) which in the opinion of the Secretary of State will assist in the prevention of money laundering.”

This new clause would create a public register of beneficial ownership information for companies and other legal entities outside of the UK that own or buy UK property, or bid for UK government contracts, within 12 months.

New clause 10—Parliamentary committee to scrutinise regulations—

“(1) A Minister may not lay before Parliament a statutory instrument under section 49(5) unless a Committee of the House of Commons charged with scrutinising statutory instruments made under this Act has recommended that the instrument be laid.

(2) The committee of the House of Commons so charged under subsection (1) may scrutinise any reviews carried out under section 28 of this Act.”

This new clause would require a specialised House of Commons Committee to approve all statutory instruments laid under the affirmative procedure under this Act. The Committee would also scrutinise the Government’s reviews of sanctions regulations.

New clause 11—Failure to prevent money laundering—

“(1) A relevant body (B) is guilty of an offence if a person commits a money laundering facilitation offence when acting in the capacity of a person associated with B.

(2) For the purposes of this section “money laundering facilitation offence” means—

(a) concealing, disguising, converting, transferring or removing criminal property under section 327 of the Proceeds of Crime Act 2002 (concealing etc);

(b) entering into an arrangement which the person knows, or suspects, facilitates (by whatever means) the acquisition, retention, use, or control of criminal property under section 328 of the Proceeds of Crime Act 2002 (arrangements); or

(c) the acquisition, use or possession of criminal property, under section 329 of the Proceeds of Crime Act 2002 (acquisition, use and possession).

(3) It is a defence for B to prove that, when the money laundering facilitation offence was committed, B had in place adequate procedures designed to prevent persons acting in the capacity of a person associated with B from committing such an offence.

(4) A relevant body guilty of an offence under this section is liable—

(a) on conviction on indictment, to a fine;

(b) on summary conviction in England and Wales, to a fine; or

(c) on summary conviction in Scotland or Northern Ireland, to a fine not exceeding the statutory maximum.

(5) It is immaterial for the purposes of this section whether—

(a) any relevant conduct of a relevant body, or

(b) any conduct which constitutes part of a relevant criminal offence,

takes place in the United Kingdom or elsewhere.

(6) In this section, ‘relevant body’ and ‘acting in the capacity of a person associated with B’ have the same meaning as in section 44 of the Criminal Finances Act 2017 (meaning of relevant body and acting in the capacity of an associated person).”

This new clause would make it an offence if a relevant body failed to put in place adequate procedures to prevent a person associated with it from carrying out a money laundering facilitation offence. A money laundering facilitation offence would include concealing, disguising, converting, transferring or removing criminal property under section 327 of the Proceeds of Crime Act 2002.

New clause 12—Public register of beneficial ownership of trusts and similar legal arrangements—

“(none) The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 are amended by leaving out paragraph (12) of regulation 45 (Register of beneficial ownership) and inserting—

‘(12) The Commissioners must ensure that the register is published.’.”

This new clause would require the Government to publish the register of beneficial ownership of trusts and similar legal arrangements on the day this Act is passed.

New clause 13—Due diligence—

“(1) For the purposes of preventing money laundering, when a company is formed, any company formation agent providing formation services must ensure that the identity and business risk profile of all beneficial owners of the company are established in accordance with—

(a) the customer due diligence measures under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692),

(b) regulations made under section 44 of this Act, or

(c) the Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on anti-money laundering measures.

(2) For the purposes of subsection (1), Companies House is to be treated as a ‘company formation agent’.”

This new clause would ensure that when a company is formed in the UK, the relevant formation services must identify the beneficial owners of the company. It will also treat Companies House as a “company formation agent”, ensuring that the data on the public register of beneficial ownership for companies is accurate.

New clause 18—Winding up companies of designated persons—

“(1) The Secretary of State may, in respect of a designated person subject to sanctions regulations under this Act—

(a) present a petition under section 124A of the Insolvency Act 1986 to wind up a company owned or controlled by a designated person; and

(b) make a disqualification order under section 8 of the Company Directors Disqualification Act 1986 against a designated person who is or has been a director or shadow director of a company or an overseas company.

(2) In this section, ‘company’ means a company registered under the Companies Act 2006 in the United Kingdom or a company that may be wound up under Part 5 of the Insolvency Act 1986 (unregistered companies).

(3) In this section, ‘overseas company’ means a company incorporated or formed outside the United Kingdom”.

This new clause would ensure the Secretary of State could close down companies owned or controlled by a person subject to sanctions under this Act using the pre-existing powers in the Insolvency Act 1986 and Company Directors Disqualification Act 1986.

New clause 20—Periodic review of exercise of powers and operation of Act—

“(1) As soon as reasonably practicable after the end of—

(a) the period of six months beginning with the day this Act is passed, and

(b) every 12 month period which ends with the first or subsequent anniversary of the end of the period mentioned in the preceding paragraph,

(2) Subject to issues of confidentiality the said report shall include a summary of any representations made in relation to the exercise or proposed exercise of the powers and the response of the appropriate Minister to the same.

(4) The Independent Reviewer appointed pursuant to section 20 of the Terrorism Prevention and Investigation Measures Act 2011 (‘the 2011 Act’) shall include a review of the operation of this Act in the reports by the Independent Reviewer produced pursuant to the 2011 Act.”

This new clause would require a periodic review of the exercise of the powers and operation of this Act six months after Royal Assent and every 12 months thereafter.

Amendment 1, page 1, line 8, clause 1, leave out “appropriate” and insert “necessary”.

Amendment 2, page 2, line 17, at end insert—

“(i) further the prevention of organised crime, or

(j) further the prevention of human trafficking.”

Government amendment 23.

Amendment 29, page 15, line 4, clause 15, at end insert—

“(i) provide for the procedure to be followed for an application for an exception or licence”.

This amendment would ensure that the regulations will include a procedure for applying for an exception or for a licence.

Government amendment 24.

Amendment 3, page 20, line 12, clause 22, leave out “3 years” and insert “12 months”.

Amendment 4, page 20, line 14, leave out “3 years” and insert “12 months”.

Amendment 5, page 21, line 36, clause 26, leave out “3 years” and insert “12 months”.

Amendment 6, page 21, line 38, leave out “3 years” and insert “12 months”.

Amendment 7, page 31, line 12, clause 38, leave out “may include guidance about—” and insert “must include, but is not limited to, guidance about—”.

Amendment 8, page 31, line 15, at end insert—

‘(3) The appropriate Minister must review the guidance issued under this section and lay a report before Parliament every 12 months.”

Government amendment 25.

Amendment 21, page 36, line 8, clause 48, leave out paragraph (a).

This amendment would remove paragraph 2(a) from Clause 48, which enables the appropriate Minister to amend, repeal or revoke enactments for regulations under section 1 or 44 using Henry VIII powers.

Amendment 9, page 37, line 27, clause 49, at end insert—

“(5A) A statutory instrument containing regulations under section 1 that repeals, revokes or amends—

(a) an Act of the Scottish Parliament,

(b) a Measure or Act of the National Assembly for Wales, or

(c) Northern Ireland legislation,

must receive the consent of the Scottish Parliament, the National Assembly for Wales and the Northern Ireland Assembly, respectively.”

This amendment would require the UK Government to obtain the consent of the devolved administrations before repealing, revoking or amending devolved legislation using a statutory instrument containing regulations under section 1.

Amendment 22, page 39, line 4, clause 51, leave out subsection (3).

This amendment would remove subsection (3) of Clause 51, which states that if a reporting provision is not complied with, the appropriate Minister must publish a written statement explaining why that Minister failed to comply with it.

Government amendments 26 and 19.

Amendment 30, page 59, line 5, schedule 3, at end insert—

“Solicitors (Scotland) Act 1980

‘(4) The Solicitors (Scotland) Act 1980 is amended as follows.

(5) Section 34(1)(d) is repealed.

(6) In section 35(1), after paragraph (c) insert—

(cc) as to the way in which solicitors and incorporated practices are to comply with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017”.”.

This amendment would amend the Solicitors (Scotland) Act 1980, ensuring it is consistent with this Act.

Amendment 27, page 59, line 14, at end insert—

“Insolvency Act 1986 (c. 45)

‘(1) In section 124A of the Insolvency Act 1986 (petition for winding up on grounds of public interest), after paragraph (1)(d) insert—

(e) any information notified to the Secretary of State pursuant to regulations made under section 1 of the Sanctions and Anti-Money Laundering Act 2018.’”

This amendment, which is consequential on NC18, would amend the Insolvency Act 1986 to ensure it is consistent with this Act.

Amendment 28, page 59, line 14, at end insert—

“Company Directors Disqualification Act 1986 (c. 46)

‘(1) In section 8 of the Company Directors Disqualification Act 1986 (Disqualification of director on finding of unfitness), after paragraph (1) insert—

(1A) The Secretary of State may apply to the court for a disqualification order to disqualify a person who is, or has been, a director or shadow director of a company, if that person is subject to regulations made under section 1 of the Sanctions and Anti-Money Laundering Act 2018.’”

This amendment, which is consequential on NC18, would amend the Company Directors Disqualification Act 1986 to ensure it is consistent with this Act.

[John Glen]

It is my privilege to address the second group of amendments, but before I do I would just like to acknowledge, as the hon. Member for Salisbury, the good will from across the House in light of the events of 4 March. With respect to the previous debate, I would like to acknowledge the work of my right hon. Friend the Member for Newbury (Richard Benyon), the hon. Member for Rhondda (Chris Bryant) and, in particular, my right hon. Friend the Minister for Europe and the Americas, who has done so much to come up with an outcome, which we have just expressed, that will mean a great deal to my constituents in Salisbury.

New clauses 2 and 13 aim to improve the quality of information on our company register. The Government believe that they would do so at a significant cost to UK business and would require considerable consequential change to the UK company law system for the measure to function. Companies House is taking active steps to improve the quality of data on the register. It has already increased its resourcing to support these investigations and more is being sought. Since the start of March, the first tranche of cases of non-compliance with beneficial ownership registration requirements were passed from Companies House to the Insolvency Service. The cases will form the basis of the first prosecutions for non-compliance with such requirements and should be prosecuted shortly.

New clause 18 and amendments 27 and 28, which were tabled by the hon. Member for Brighton, Kemptown (Lloyd Russell-Moyle), allow for action to be taken against so-called brass-plate companies that breach sanctions. The reason that brass-plate companies have not been prosecuted or wound up relates to the challenges of collecting evidence of their activities, not a lack of legal powers. I look forward to hearing what he has to say, but the amendments do not provide any enhanced ability to take action against such companies. We continue to explore with partners across Government whether we could do more to address this issue, so I hope that in due course, hon. Members will agree to withdraw this set of amendments.

I now turn to amendment 19, to which new clause 5 has a similar purpose. These proposals seek to clarify the interaction of powers in the Bill with the provisions of the European Union (Withdrawal) Bill. New clause 7 seeks to constrain the powers of future Governments to amend the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. However, the powers in the European Union (Withdrawal) Bill are necessary to ensure a functioning statute book immediately after the UK ceases to be a member of the EU.

Amendment 30 seeks to amend the Solicitors (Scotland) Act 1980 to give the Law Society of Scotland greater powers to conduct its role as an anti-money laundering supervisor. The Government strongly support all supervisors having adequate powers to effectively monitor and take measures to ensure compliance from their members and to use proportionate and dissuasive sanctions when their members do not comply with the rules. The Law Society of Scotland has raised with Treasury officials the issues that it would like to amend in legislation. They are looking closely at this issue and will continue to work with the Law Society of Scotland to address it. I therefore respectfully ask the hon. Member for Glasgow Central (Alison Thewliss) not to press that amendment, but no doubt we will have a discussion in due course.

New clause 8, on beneficial ownership, seeks to set down in legislation an obligation to implement, within 12 months of the Bill getting Royal Assent, our commitment to establishing a public register of company beneficial ownership of overseas companies that own or buy property in the UK. The UK was the first country in the G20 to establish a public register of company beneficial ownership, and Transparency International concluded that we are one of just three G20 countries with a “very strong” legal framework around beneficial ownership.

Let me be clear to the House that the Government are committed to establishing this register and to bringing increased transparency to UK property ownership. The Government committed in January to publishing a draft Bill before the summer recess, and we recently published our response to the call for evidence. We will legislate early in the next parliamentary Session to establish the register by 2021. We will be the first country to establish the register and it is important to get it right.

New clause 12 would require HMRC’s register of trusts that generate UK tax consequences to be published. Information held on the register is accessible to law enforcement agencies and allows them to readily draw together information on trusts, including offshore trusts, when they generate a UK tax consequence. However, trusts, unlike companies, do not have any independent legal personality in their own right. They are frequently established for legitimate and highly personal reasons, such as protecting assets for children or vulnerable adults. Placing this information into the public domain would infringe the privacy rights of trust beneficial owners and needlessly publicise the financial affairs of vulnerable people for whom trusts are established. I therefore ask Members not to press those amendments.

New clause 11 seeks to create a corporate criminal offence of failure to prevent money laundering, which is not necessary because of reforms to the anti-money laundering regime already in place. The proposed offence is substantively available in respect of firms regulated for anti-money laundering purposes by the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, which require regulated firms to have policies, controls and procedures to mitigate and manage risks of money laundering and terrorist financing. Failure to comply with these requirements is already a criminal offence.

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Furthermore, through the introduction of the senior managers regime, banks are now required to ensure that a named senior manager has unequivocal responsibility for overseeing the firm’s efforts to counter financial crime. If a relevant firm breaches its anti-money laundering obligations, the FCA can take action against the responsible senior manager, if they can prove that they did not take such steps as a person in their position could reasonably have been expected to take to avoid the breach occurring. The new clause would not, therefore, go beyond the existing regulatory framework in this area.

Amendment 7, which stands in the names of the hon. Members for Bishop Auckland (Helen Goodman) and for Oxford East (Anneliese Dodds), would change “may include guidance about” to “must include” in respect of three stated areas of guidance. The amendment could be interpreted as limiting the areas on which the Government have committed to providing guidance to just the areas listed in the clause. With amendment 8, the hon. Members also wish the Government to review guidance issued under clause 38 on a yearly basis and submit a report to Parliament containing the results of that review. I see no grounds for instituting an additional review and reporting requirement in the Bill as there is already one in the Bill.

[Helen Goodman]

Those two amendments were tabled by the SNP.

[John Glen]

I am happy to be corrected, and I apologise to the hon. Lady.

Amendment 29 relates to the procedure by which individuals or entities apply for licences and exceptions to be included in the regulations. Retaining the application procedures in guidance will give the Government the flexibility to update them as needed and to respond to stakeholder feedback.

The Government have tabled new clause 4 because we recognise the concern raised by the Independent Reviewer of Terrorism Legislation and the Joint Committee on Human Rights that the repeal of part 1 of the Terrorist Asset-Freezing etc. Act 2010 would remove the independent reviewer’s oversight of domestic counter-terrorism asset freezes. Government new clauses 15 to 17 and amendments 23 to 26 will provide the UK Government with the powers necessary to enforce UK sanctions regulations against ships in international and foreign waters. These powers will ensure adherence to the standards set out in relevant UN Security Council resolutions and provide protection against the transportation of dangerous and harmful goods in international waters. These provisions contain important safeguards on the use of these powers, including a requirement to have reasonable grounds to suspect that sanctions are being flouted before enforcement action can be taken as well as flag state and foreign state consent where relevant.

New clause 20, tabled by the hon. Member for Glasgow Central—I hope I have got that one right—would oblige the Secretary of State to lay a report before Parliament each year on the exercise of the powers in the Bill. We have a range of reporting requirements in the Bill already, including an annual report on the sanctions regulations in force, and further reports when sanctions are imposed or amended. In addition, new clause 3 sets out reporting requirements for regulations made under the human rights purpose. We consider it unnecessary, therefore, to add an additional report on top of these, given that the issues that would be addressed in the report would be mirrored by those already required in the Bill.

Amendments 3 to 6, also tabled by the hon. Lady, would require that every sanctions designation be comprehensively re-examined annually. We agree that sanctions should only be in place for as long as there are good reasons for them to be so, and the Bill contains a range of procedures to ensure that all our sanctions are subject to regular scrutiny and review. We believe that three-year comprehensive reviews, combined with a robust package of procedural safeguards in the Bill, will ensure that these standards are at least maintained, so we would ask that she consider not pressing her amendments.

New clause 10, tabled by the hon. Members for Bishop Auckland and for Oxford East, would require statutory instruments that are to be considered under the draft affirmative procedure to receive a positive recommendation from a House of Commons Committee before being laid. All secondary legislation to which it would apply requires affirmative votes before coming into force, and we believe that that negates the need for additional parliamentary scrutiny. Sanctions are a manifestation of the UK’s foreign policy. They are not stand-alone or independent initiatives. Indeed, a number of existing parliamentary Committees have considered, or are planning to consider, sanctions issues, including the House of Lords EU Committee and the House of Commons Treasury Committee. It is not clear why further layers of scrutiny are necessary or desirable.

Amendment 22 would remove the requirement for Ministers to publish a written statement of explanation if they did not comply with a reporting provision. I should make it clear that this provision does not in any way displace the statutory duty to report; Ministers who fail to comply with that duty must face the consequences, regardless of whether an explanation is given.

Amendment 1, tabled by the hon. Member for Glasgow Central, would mean that sanctions regulations could be created only when that was deemed “necessary” for the purposes of the Bill, rather than when it was deemed “appropriate”. For many years the use of sanctions has been an essential part of international diplomacy, to respond to threats such as terrorism or to change unacceptable or threatening behaviour. It is important for the Government of the day to have the flexibility to impose sanctions or not to do so, after a thorough review of the prevailing political situation. Changing “appropriate” to “necessary” would mean that the Government could consider sanctions only as the last resort.

Amendment 9 would require the legislative consent of the devolved Administrations for any sanctions regulation made under section 1, if that regulation included a consequential repeal of, revocation of, or amendment to any law created by those Administrations. The power to create sanctions regulations falls under matters that are reserved to Westminster, and that includes modifications consequential on those regulations. Under the UK’s constitutional settlement, foreign policy is a reserved matter. The Bill gives the Government the power to impose sanctions as a foreign policy and national security tool.

[Alison Thewliss]

I have already made this point to the Minister. I agree that the Scottish Parliament does not have the power to impose sanctions, but why do the UK Government want to say that we cannot do so when it is already clear that we cannot? Why should the Government revoke something that we cannot actually do?

[John Glen]

We contend that the amendment would change this part of the devolution settlement, and we have received no representations from the Scottish Government on it.

Amendment 21 would remove Ministers’ power to make consequential amendments, related to sanctions and anti-money laundering regulations, to existing primary and secondary legislation. That would remove the ability to ensure that the statute book works after sanctions have been imposed. The power is not unusual, and is confined to modifications that arise solely as a result of sanctions or anti-money laundering provision. In any case, regulations making such modifications of the statute book would be dealt with by the draft affirmative procedure, so both Houses would need to approve them before they could come into force. I ask the House to preserve that important power.

Let me make it clear that the Government support the principle of amendment 2, tabled by the hon. Member for Glasgow Central, which is to help prevent organised crime and human trafficking. Those are serious issues that we are strongly committed to tackling. However, as we have explained before, we do not think it necessary to state that sanctions regulations could be created for these purposes in the Bill, because it already provides the powers to impose sanctions in these cases.

Government new clause 5 is technical. It simply seeks to clarify the interaction of the powers in this Bill with the provisions of the European Union (Withdrawal) Bill. This Bill contains powers that enable the Government to amend retained EU law to impose or lift sanctions. The new clause simply makes it clear that restrictions in the European Union (Withdrawal) Bill do not prevent those powers from being exercised in the way that was intended.

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

I shall speak to amendment 21 and new clauses 8 and 13. I will try to be disciplined, as the Minister was, by keeping my remarks as brief as possible, but I would state that while many of us feel that we have seen some progress in terms of transparency for overseas territories, we need a much broader programme of reform so that we stamp out dirty money from the British financial system.

While the Minister referred to amendment 21, he failed to grasp its significance and intention. As with other Brexit-related Bills, the Opposition have many concerns about the wide-ranging powers that this Bill gives to Ministers, and in particular the way in which it gives Ministers the ability to amend, repeal or revoke legislation through regulations without appropriate scrutiny. We frequently cited Lord Judge in Committee, but it is appropriate that I do so one last time in this Chamber. He was very clear about the dangers of this power. As he said, it gives Ministers

“‘regulation-making powers for this, that and the other’”.

He is a very learned person and, as he put it,

“the secondary will override the primary.”—[Official Report, House of Lords, 17 January 2018; Vol. 788, c. 718-19.]

I do not think that many Government Members could disagree with that. Clearly this is an excessive power. It is not justified by the need for speed, for reasons that were well rehearsed in Committee.

The Government have yet again today maintained that these powers are for the sole purpose of combating money laundering and maintaining a sanctions regime, but we heard just a few moments ago that these issues can be highly contentious. There can be different points of view within our parliamentary system on these matters, and that must be reflected in an appropriately inclusive parliamentary procedure.

The Committee advocated by Her Majesty’s Opposition is necessary precisely because the European Scrutiny Committee will not be operating in its same form after we leave the EU, and our sanctions policy will not be derived from the EU once we have left. That is surely the whole point, so we will need another body that can conduct that scrutiny. We will not want Members turning up on an ad hoc basis to a secondary legislation Committee ill briefed, ill prepared and not expert about the topics at hand. That is why we are making our call, and the arguments for such a body are self-explanatory.

[Kelvin Hopkins (Luton North) (Ind)]

I am a member of the European Scrutiny Committee, and we do take the view that after Brexit there should be a Committee that can continue to keep an eye on what is happening in the EU, because that will still be important and very relevant to what happens in Britain.

[Anneliese Dodds]

And that Committee has been able to develop its expertise around some very complex issues. We will not have such expertise in the future without the kind of Committee that we are advocating. It will be spread across a range of Departments, as is the case with our sanctions, so there is a need for a group in which expertise can be built up among Members. Surely that is enormously important.

As the Minister said, new clause 8 would bring forward the timetable for introducing a public register for foreign-owned property in the UK, but it would do so only in relation to the Government’s current proposals. It would actually be behind the initial timetable that we were given by the Government for introducing such a register, according to which we should have seen developments last month, given that today is 1 May. I will not rehearse all the arguments made by my hon. Friend the Member for Hornsey and Wood Green (Catherine West).

[Alex Sobel (Leeds North West) (Lab/Co-op)]

Global Witness has found that there are 86,000 anonymously-owned properties in the UK, many of which are empty. Does my hon. Friend agree that we should legislate so that we will know who owns these properties, and therefore be able to bring them into use by people in this country?

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[Anneliese Dodds]

My hon. Friend is absolutely right. I understand that those 80,000-plus properties, which are often owned through secrecy jurisdictions, are the ones that crop up most often in corruption investigations. It is often exactly that kind of property that appears to be used illicitly, and it is enormously important that we get a grasp of this problem. We have seen—through the various laundromat investigations, for example—how British property has been used not only to hide illicitly gotten gains, but to guarantee additional profit, because those properties can be let out, guaranteeing a future income stream.

In that regard, I will give the Government one more opportunity. I have asked them many times to indicate whose side they are on. Are they on the side of the investigative journalists who have shown us so much about the movement of dirty money through our financial system, either through the laundromat investigations or through the Paradise, Panama and Luxembourg leaks papers, or are they on the side of those who want to shut down debate on this matter? It would also be helpful to know whether they think it is appropriate that the BBC and The Guardian are being singled out by the firm Appleby and having legal action taken against them purely because they published information from the Panama papers leaks. They are the only two British companies to be singled out in that way.

Moving back to the substance of new clause 8, the Government initially intimated that they would introduce the register back in April. Instead, it now will not be available until 2021, but we heard nothing from the Minister about why that delay is necessary. Investigative reporters have already created a register of sorts that we can all access on the internet. It was created by journalists at Private Eye and other organisations who matched up Land Registry data with company data. I am not aware of any significant worries about the reliability of that information, so why are there so many concerns in this regard? The Financial Action Task Force is due to report soon on our systems to combat money laundering, and this is not the time to delay any action.

If Ministers feel the need to slow down the process in order to consult the Opposition and produce draft legislation, I can tell them that Labour Members support such a measure. The Government do not need to jump through hoops with this legislation—they can move ahead immediately with our full support—so there is no need for delay. In fact, there is every need for haste. I look forward to hearing whether Conservative Members think that there are genuine reasons for this hold-up, because I do not believe that there are any. There is cross-party support for the original timetable. Indeed, faster progress was urged by Conservative peers when the matter came up in the other place, so I hope that the Government will listen to them and to the Opposition, and deliver this register to an appropriate, faster timetable.

On the question of registers, the topic of trusts has been raised in previous debates as well as this one. In fact, it is covered by an Opposition amendment, and the Minister also mentioned it. Not having transparency for trusts will place us behind developments in the European Union, because there is now consensus at the EU level about the need to ensure that there will be transparency for business-like trusts, so we will be behind the curve on that one. Of course, the coalition Government lobbied against transparency for trusts, and we now know that David Cameron personally intervened to try to prevent it. However, this Government could take a different approach and introduce greater transparency, so I hope that they will shift that position.

On the offence of failure to prevent money laundering, I hope the House will not mind if I briefly ask the Minister when exactly we will see the Government response to the consultation and call for evidence, which ended last year, on the failure to prevent economic crime. Although that process ended many months ago, we still do not know what action the Government will take—we are still waiting. There is no lack of evidence for the need to take action; there is only a lack of will, sadly, and that needs to change.

Our new clause 13 is similar to the SNP’s new clause 2, but it is rather broader, as it deals with trust and company service providers, as well as Companies House. In the previous debate, the Minister for Europe and the Americas rightly drew attention to the fact that the UK was a frontrunner in adopting a public register of beneficial ownership. The Opposition are of course pleased that the Government have accepted the need for such a register for the overseas territories but, as Members on both sides of the House have said, we need to ensure that the information in any such register is accurate, and that is the point about which many concerns have been raised.

I have been in correspondence with the Minister and with the FCA about one particular case, namely that of the so-called Business Bank Italy, in which a number of rather strange figures seem to be involved. One of them gave his title as the Italian translation of “the chicken thief” and maintained that he lived on the “Street of 40 Thieves” in the town of “Ali Babba”. I have tried to find out whether he and those associated with him are being prosecuted, but he has certainly been under investigation in Italy, and some of his associates have been prosecuted for their involvement in the mafia over there.

In contrast, the only person to have been prosecuted— I would also say persecuted—in the UK for submitting false information is Kevin Brewer, who is actually a whistleblower. He created a fictitious company and told the world about it in the pages of a national newspaper, but his prosecution has since been held up as showing the Government’s determination to

“come down hard on people who knowingly break the law”.

He broke the law in order to show that the law was an ass under the current system, and it is a disgrace that he has been prosecuted when others seem to be able to operate with impunity. The right hon. Member for East Antrim (Sammy Wilson), who is no longer in the Chamber, referred to an 85-year-old who was exercising significant control in 25,800 companies, so it is essential that such individuals are investigated.

New clause 13 would require any company formation agent to carry out appropriate due diligence on the beneficial owners of the companies that they are forming. It would cover both trust and company formation service providers, and Companies House, where companies can be directly registered without anyone else being involved in the process. I will not re-run our debates during the Bill’s previous stages, but suffice it to say that rather than providing additional clarity—I say the same of the additional exchanges that I have had with Ministers since—the waters have only been muddied. There is a huge ambiguity about the precise role of Companies House. Some Ministers seem to resist the view that it should be responsible for checking data on the business database, while others say that it should exercise that kind of due diligence and is doing so perfectly well. What I see as a parliamentarian, as do many businesspeople and others who are concerned about the fraudulent companies that appear to be able to operate with impunity, is Companies House sadly being severely behind the curve that has been set by crooks and criminals.

The Minister said that change would be difficult, but it would not. For example, when one registers a company with Companies House, one can enter whatever information one wants in the boxes on the website. That website does not even have the highly technologically sophisticated tool of a drop-down menu, which means that people can enter non-existent addresses, as I just mentioned, suggest that two-year-olds are people of significant control in a company and so on. The situation is ridiculous and dealing with it would not require a huge amount of investment.

We also need stronger action when it comes to the responsibilities of trust and company service providers. There is extensive evidence, most recently revealed by “Panorama”, that existing anti-money laundering legislation is insufficient to deter the money-laundering activity facilitated by some TCSPs.

I have had an extensive exchange of letters with the Treasury, and I am grateful to the Minister for corresponding with me on this subject, particularly regarding the problem of foreign TCSPs registering companies with Companies House. I have been informed by the Government that foreign TCSPs are of lower risk than UK-based ones, despite the fact they are not covered by UK anti-money laundering legislation. I received the latest letter this very morning, for which I am grateful, and it concludes by stating that foreign TCSPs are regulated by their home jurisdictions. That is okay then—they are regulated by their home jurisdictions, so there is no problem. Sadly the evidence suggests quite the opposite.

We have seen some positive moves from the Government today, under enormous pressure from Members on both sides of the House, on Magnitsky clauses and on beneficial ownership registers for overseas territories, but we need appropriate scrutiny of sanctions and anti-money laundering legislation, a return to something nearer the original timetable for foreign-owned property registration, and the exercise of proper due diligence on the information submitted to our companies register if we are really to clean dirty money out of our financial system.

We have to stop crooks, criminals and the corrupt benefiting from our country’s good name. Our Government need to stop obfuscating and start acting.

[Alison Thewliss]

I rise to speak to the amendments in my name. I will rattle through them and say why they have been tabled. The primary concern is about Companies House. Very much as the hon. Member for Oxford East (Anneliese Dodds) has just said, we have laid out our serious concerns at all stages of the Bill. It is disappointing to get to this stage and find that the Government are still not listening to those concerns.

Companies House does not have the adequate resources or powers sufficiently to monitor and ensure the integrity of the company incorporation data submitted to it.

[Hannah Bardell]

Does my hon. Friend agree that it seems to be harder to open a gym membership than to register a company with Companies House?

[Alison Thewliss]

My hon. Friend is absolutely correct. Registering with Companies House seems to be the easiest thing possible. It is baffling that anything else, such as a tax return, a passport application or a driving licence application, needs to go through the gov.uk verify scheme, but Companies House does not have that requirement. Just tightening up those rules would help hugely both to ensure the accuracy of the information and to clamp down on those who wish to abuse the system. It is in all our interests to make sure the system is accurate, but it is not accurate.

Worse, there are only about 20 people at Companies House policing some 4 million firms’ compliance with company law. There are no proactive checks on the accuracy of the information submitted, which, as the hon. Member for Oxford East has just said, allows a significant amount of false and misleading data to be submitted to the companies register.

[Bob Stewart (Beckenham) (Con)]

The hon. Lady says there are no proactive checks at Companies House, but if an outside person challenges an entry, surely the people at Companies House have to check it out. It is a criminal offence if an entry is wrong, is it not?

[Alison Thewliss]

The difficulty in all this is with enforcement. As the hon. Member for Oxford East pointed out, it has been very difficult to get anything to happen in the case of “the chicken thief”. The only person to be prosecuted so far is a whistleblower, which does not lead me to believe much will be done to those who abuse the system. The volume of data at Companies House makes such abuse very difficult to tackle. Indeed, investigative journalist Richard Smith has flagged up such things and has found it difficult to get any action. If a person submits the wrong name and address on their form, either deliberately or accidentally, how is the agency supposed to track down that person to get them to correct the information?

Not making the system accurate allows hon. Members to stand up in this place and say that transparency of registers does not work, but we know it does work if it is done properly and if we invest in it properly. We need to be careful to make sure that our own integrity is right, because if we are leading on transparency and beneficial registers across the world, we need to make sure that what we are doing here—the intention around Companies House—is what is carried out in practice. Companies House needs more resource to allow that to happen.

17:30

The Government need to make sure that Companies House can identify suspicious activity and act, and will carry out due diligence, and it needs resources. I was shocked to find out that Companies House is not obliged to act under the same anti-money laundering legislation as everybody else. Company formation agents, lawyers and people owning a firm are obliged to act under that. They have to do certain things, such as setting up a bank account and going through all this anti-money laundering legislation, whereas Companies House is not under that legislation. It should be, because it was the primary resource for 40% of company incorporations last year: 40% of incorporations were done through Companies House, yet it does not fall under the anti-money laundering legislation.

Our new clause 2 therefore seeks to ensure that any person wishing to register a company must be checked for due diligence, in line with the money laundering regulations. It would also ensure that the Secretary of State could charge fees for due diligence checks. After all, it costs only £12 to register a company, which is a pretty low bar. When we consider the cost of everything else we might want to do in life, such as getting a passport or driving licence, applying for a gym membership and so on, we see that £12 to register a company seems low. We might expect someone registering a company to have more than £12 in the bank account in order to do that and have it done properly, so due diligence fees could be built into this as well. The Government need to act on this; otherwise, we leave the door wide open to money laundering, which reduces the whole integrity of the system.

On amendment 9, as I said to the Minister, it does not make sense for the Government to seek to overrule the devolved institutions on something they cannot do. That does not seem logical, and I cannot understand exactly why this approach is being taken. The Government have not given me an explanation for it, and I would still like this cleared up.

Our amendment 1 proposes removing the word “appropriate” and inserting “necessary” We, like Labour Members, have been concerned that the powers given to Ministers in this Bill are very wide, so inserting “necessary” would give a bit of a check on the system. It is not an entire check, but it is a bit of one. This issue was discussed in the Lords and it remains a concern. We would not expect this Government to make sanctions willy-nilly, but this is not legislation just for this Government; it is for all future Governments, and we want to make sure there is a sufficient check on the system.

In previous debates, I have discussed our proposal, contained in amendments 3, 4, 5 and 6, to leave out “3 years” and insert “12 months”. I hear what the Minister says about the way in which the sanctions regime will operate—people will be checked and there will be a means of dealing with this—but this issue was also raised in the House of Lords. Lord Pannick considered the three-year period not quite justified:

“It is right and proper that sanctions of such significance should be reviewed more often than every three years.”—[Official Report, House of Lords, 29 November 2017; Vol. 787, c. 699.]

It will quite often fall to the people who have been sanctioned or find themselves sanctioned to challenge that, but again they would need to know that they were on the list and to go through a process to do that. It would be better if this were reviewed on a more regular basis.

Amendments 7 and 8 relate to what is in guidance. They might be seen as semantic or technical, but UK Finance and its members are concerned that

“without a more precise requirement, the guidance issued”

by Government

“will remain too high level and lacking sufficient detail.”

Nobody who is trying to do a good thing, such as moving aid funds around the world, wishes suddenly to find themselves falling foul of sanctions because the guidance has not been clear enough. UK Finance has also highlighted that the guidance currently available on the Government’s website is not sufficient to allow it to do what it wants to do in terms of moving funds around in support of humanitarian operations. The very last thing we would want to do is hinder the foreign policy objective of providing humanitarian aid by the laws under which we make sanctions regulations. We therefore want to make sure that guidance is more precise and much clearer, to allow financial institutions the confidence to deal with that.

Finally, amendment 30, on the Solicitors (Scotland) Act 1980, is another pretty technical amendment. The Law Society of Scotland flagged this issue to me, as it is concerned that an earlier Government amendment was made in the wrong place, with the effect that the Law Society of Scotland cannot suspend people under the suspension power in section 40 of the 1980 Act. Section 40 should mean that the society can suspend a solicitor’s practising certificate if that solicitor has failed or is failing to comply with the rules made under section 35 of the 1980 Act. The society says that there is no analogous suspension power under section 34.

The Government have made an amendment, but in the wrong place. I appreciate that the Minister has said that they are looking into this matter, but it seems not to make an awful lot of sense to intend to do something that would help the Law Society of Scotland, only to not do it by making the amendment in the wrong place, leaving the society without the ability to strike off solicitors who are getting up to no good. It would make an awful lot of sense if the Government could make some progress on this matter.

We tabled amendment 30 to ensure that the issue is kept on the agenda, and that the Government do not forget about it but bring something forward as soon as they possibly can, because we need to see more action. As with the other matters that I have addressed, including Companies House and SLPs, it is absolutely key that we get timescales from the Government, because while we are not acting—while the Government are not doing things—money launderers are continuing to profit and to move money around without any kind of sanctions being applied against them. They have absolute impunity, so we must take action as soon and as swiftly as we can to tighten up all the loopholes that still exist.

[Jo Swinson]

I rise to speak briefly in support of various amendments, including amendment 21, which would remove the Henry VIII powers. It has become an unfortunate hallmark of this Government that they have sought to put far too much power in Ministers’ hands. If anything, the whole “take back control” thing should be in the direction of Parliament and the representatives of the people, not to Ministers, with decisions therefore undergoing less scrutiny. I very much support amendment 21 on that basis.

I am sure that shortly the House will hear from the hon. Member for Brighton, Kemptown (Lloyd Russell-Moyle), who tabled new clause 18, which I very much support. I understand that my support was communicated to the Public Bill Office, but unfortunately my name was not added to the amendment paper. I wanted to put on record the fact that that communication had been sent. My right hon. Friend the Member for Twickenham (Sir Vince Cable) advocated the change in the new clause during our time in coalition, but it was one of those things that was blocked by our coalition partners, who claimed that it would somehow add to regulatory burdens and so would not be possible. I am delighted to support that new clause today.

On new clause 12, which was tabled by the hon. Members for Oxford East (Anneliese Dodds) and for Bishop Auckland (Helen Goodman), it is absolutely sensible that, just as we have a public register of beneficial ownership for companies, the same requirements should apply to trusts, given that we know how often trusts are used in a way that is conducive to money laundering. I understand that there are concerns about some individuals who may be vulnerable, but a better way to deal with that would be to carve out specific exemptions for such individuals, rather than go in the other direction, with the assumption being secrecy. It is about what the default is, and transparency very much ought to be the default, particularly given the widespread evidence of the use of trusts for the sheltering of wealth and therefore as cover for shady activities.

Finally, I wish to talk about the Companies House issues raised by new clause 13, because I was formerly the Minister in charge of Companies House, which tries to do a good job, albeit not with significant resources. Some of the changes that have come in—such as the move to do much more online, thereby getting rid of the paper trail caused by requiring every single company registration to be sent in on paper—are positive and often work well. I speak as somebody who used the Companies House service to set up a company when I was out of Parliament.

I wish to see the process remain simple, straightforward and low cost so that it is easy for people to set up new companies. However, it strikes me that, in that move to online, we have opportunities to undertake many more checks in a more cost-effective way than would have been possible under the paper-based system that existed before. As the hon. Member for Oxford East pointed out, we can have innovations such as drop-down menus which we are familiar with on so many different websites that we interact with in other spheres of life. We can therefore design into the system many of the checks that need to be done.

For addresses to be entered, we could have a simple checking process against the postcode address file. Anyone in this Chamber who does online shopping—I confess that I have, on occasion, done it myself—knows that it is just not possible to enter an address that is not a straightforwardly understood UK address, which is part of the postcode address file. There are therefore lots of good opportunities for Companies House to update its system so that it is much more adept—still in a cost-effective way—at identifying the small proportion of registrations, out of the large number of companies that register with Companies House, that require enforcement activity. Being able to do that in a risk-averse manner, as well as, no doubt, dealing with other patterns of registrations that might end up needing to be investigated would certainly be helpful. Over time, no doubt, tools could be developed to improve the risk assessment process.

[Maria Caulfield (Lewes) (Con)]

The hon. Lady is making some good points. Currently, companies have to pay a nominal fee to register. On the types of registration that she is talking about and the in-depth detail that will need to be considered, has she done any work on the sort of fee that companies will be looking to pay?

[Jo Swinson]

I welcome the hon. Lady’s intervention. Basically, I am talking about making changes to the system in a cost-effective way. We are talking about system changes to multiple transactions, which, as I have said, are hardly groundbreaking in terms of online systems that exist in other spheres. I am talking about having access to these databases that already exist. Over time, intelligence-led risk profiling would also make sense. It is not about saying that for every company registration there needs to be an incredibly cumbersome process; it is about saying that measures could be taken in a fairly cost-effective way to use the technology and the ability that we now have—while things are being registered online—to identify where the problems are, in much the same way that when we enter a company name with one of those 135 sensitive words, a flag goes up, and it will be looked at by some human eyes. We could certainly have that system in place with a wider set of parameters without impinging on the general efficiency of the system, which no Member would want.

[Will Quince (Colchester) (Con)]

rose—

[Jo Swinson]

I am finishing my remarks shortly, but I will certainly give way.

[Will Quince]

The hon. Lady is very kind in giving way. I have a very quick question for her. She rightly answers the question from my hon. Friend the Member for Lewes (Maria Caulfield) about the process and, potentially, adding additional cost. The hon. Lady probably did it herself but many people use intermediaries—be it solicitors, accountants or other individuals and businesses that do it for them. Does she foresee additional cost being created because of the additional administration involved?

[Jo Swinson]

What we are discussing here is having additional checks at the Companies House end. For other organisations, some additional checks already happen. The hon. Gentleman is right that I did do a bit of a test run to check what I had said about it being straightforward. Happily, it generally was fairly straight- forward and an easy system to use. None the less, I think that there would be a way we could use new technology to improve enforcement work through the Companies House website. Additional resources will be needed if we are to take this seriously, and I hope that the Government will recognise that in their response.

[Lloyd Russell-Moyle]

For £12, disreputable individuals can register UK companies and begin trading arms internationally through a network of subsidiaries. For £12, they receive the legitimacy of a trading company and a respectable business. We know that this is the case because it has been happening for 10 years, and it could well be happening right now.

We know that this has been happening thanks to the investigative work of Amnesty International and other non-governmental organisations. In 2014, Ukranian-based S-Profit Ltd, which was registered here in the UK, was named by the South Sudanese Government as brokering a £44 million small arms deal. The South Sudanese Government are subject to sanctions; yet, astonishingly, S-Profit Ltd is still a registered British company.

In 2009, the Committees on Arms Export Controls found that a company called Hazel UK had been brokering arms to Libya, Syria and Sri Lanka, which violated sanctions against those countries at the time. This company is still registered. I could go on. For example, System Use Contract Ltd brokered arms to Rwanda. I have a long list.

17:45

Despite this wealth of evidence, these companies are engaged in sanctions busting but are still registered as British companies. Why? Well, it is partly in the name. They are brass-plate companies: they have no staff, no real office buildings and no real assets based here. Today, I received a letter from the Minister himself, recognising that it is

“difficult for investigators to collect the necessary evidence to reach the threshold for prosecution.”

Those are the Minister’s words, not mine. If we wanted to conduct criminal investigations into these companies, we could not bring in suspects for questioning, raid offices and buildings, or seize assets. Equally, the current sanctions are mainly freezing assets and travel bans, which have no impact on these companies.

In the Minister’s letter to me, he also said that current sanctions are as temporary measures, not as long-term measures. Well, the Customs and Excise Management Act 1979, from which this Bill derives many of its enforcement powers, allows for the destruction and resale of goods. These are permanent acts; we cannot un-destroy a good. New clause 18 would allow for a seven-year appeal for any company that were shut down, compensation if a company were shut down incorrectly and the reversal of a temporary measure if the wrong decision were made.

[Bob Stewart]

I am intrigued by this. Fundamentally, the hon. Gentleman is saying that there is a brass plate and a registration with Companies House, but there is actually nothing between that and a company working abroad. Is he saying that there is no connection and absolutely no way that these people can be traced, or have I got it wrong?

[Lloyd Russell-Moyle]

This is not about tracing. These companies use British registration but undertake activities through a set of subsidiary companies or other companies that they are linked to abroad to take part in the nefarious activity. The individuals might be directors of both companies, for example.

The current threshold of requirement to disbar individuals or strike off a company is at the criminal level of responsibility, but that level is just far too high. If it were brought down to the civil level of responsibility, the Minister would be able to take action. Now, the Minister may feel that he would not want to take action and I am not compelling him to do so. I am simply giving him the powers, if need be, that already exist in the Insolvency Act 1986. This is not about extending powers that have never been used before.

The Government say that there is no information about these companies at all. Well, let us look at S-Profit Ltd, a UK-registered company that brokered arms to the South Sudanese Government. This Government have received copies of the contracts involved. The Ukrainian directors of the company have even admitted that the contracts were genuine, as did the Ukrainian state company responsible for brokering the weapons. It is not enough for a criminal action, but it is clearly enough for a Minister to invoke the public test—that is, to ask whether the company is acting against the public interest and breaching sanctions. Such companies should be struck off, so that they cannot use the brand Britain as a front for their activities.

When Sir John Stanley was in this place, he recommended the same powers in the Committees on Arms Export Controls. I am not trying to bring in something that is hugely controversial. The Government have already said today, in general, that they would like to take action on these things. I was really disappointed that we were not able to get the Government to support this. I tried to meet the Government a number of times, even coming up in recess time to do so, with the meeting being cancelled 20 minutes before it was due. It is a real shame, and I would like the Government to give way. However, I will not press the amendment to a vote on this occasion if they make a commitment to look at this further and to take it on, as I think they have done today. I hope we can work together on this.

[Hannah Bardell]

Thank you for letting me speak, Madam Deputy Speaker. I was not expecting to get in, so it is a real privilege to have the opportunity to bring up the rear of the debate.

I thank my hon. Friend the Member for Glasgow Central (Alison Thewliss) for her steadfast work on this Bill. I also thank other Members across the House. In particular, we heard an excellent speech by the hon. Member for Oxford East (Anneliese Dodds), who spoke about SLPs and the negative impact—the devastating impact—they have had across the UK. I recently met a Moldovan human rights lawyer at the Council of Europe. Many Members will be familiar with the nefarious activities of the Moldovan Government and certain oligarchs. She—I will not name her—has experienced huge tragedy in her life, being separated from her young son in trying to fight the Government, who are using an SLP to launder money and are engaged in criminal activities.

The point about reputation is really important, not just for Scotland but for the rest of the UK. The Scottish name is being used, and misused, through a piece of legislation. By and large, those who use SLPs are doing so for legitimate reasons, but a few are spoiling it for the many. SLPs are increasingly being abused by money launderers because of their unique characteristics. The hon. Member for Oxford East mentioned the Russian laundromat case, which extracted £16 billion out of Russia between 2010 and 2014. There were 114 SLPs in the laundromat, two of which were core laundering vehicles. Progate Solutions no longer exists—the Sarajevo-based Organised Crime and Corruption Reporting Project uncovered that company and highlighted its activities—but it is still being used to launder money. The hon. Member for Bishop Auckland (Helen Goodman), who has done a lot of work on this, described there being an “explosion” of SLPs. In terms of the statistics, 82% of all SLPs registered at the end of 2016 and 70% of SLPs incorporated during this period are registered at just 10 addresses.

Getting to the core of the issue of transparency, this is about how business is being done now. We look at gender pay reporting and the impact that that has had on business in this country. That is a move forward. It was interesting to hear some Conservative Members talking about resources for us to have the power to investigate these companies. Our very limited and stretched public resources are being used so that our trained taskforces can investigate them. If we bring about a more transparent system and more transparent laws, our vital resources can be directed towards other crimes to protect our citizens. This is fundamentally about protecting our citizens across the UK.

With regard to Companies House, it is important to put it on record that I do not think anybody would want to criticise the staff or the job that they do, but what has happened to some consumers cannot be right. I have had constituency cases where people have bought services or goods, the company has gone bust, and they are left with nothing—neither their money back nor the items. A constituent of mine followed the individuals concerned through their registration in Companies House, and discovered that they had set up a new company and started trading again within a few weeks. She was told by the police that there was nothing that she could do because this was an entirely legitimate practice. It cannot be right that people are allowed to do that. That is why we feel that new clause 2 is so important.

[Kelvin Hopkins]

We have heard from earlier speakers that Companies House is desperately under-resourced, with a small number of staff. Is under-staffing a body not a simple way to make it ineffectual? It should have many more staff.

[Hannah Bardell]

I thank the hon. Gentleman for that point. It is also important to note the point made earlier about how difficult it was to make Companies House bigger or give it more resources or a greater remit. That seems bizarre. I sat on the Public Bill Committee on the Enterprise Bill, in which the Government, in a welcome move, introduced the Small Business Commissioner, which involved setting up a whole new organisation with new resources. The failings of Companies House, to my mind, will work against the Small Business Commissioner and give it more work.

It would be interesting to hear from the Minister on that point. Companies House needs more resource and better oversight. Companies that are not doing business properly and going about their business in the right way are surely a threat to good businesspeople across the UK. If the Government will not support new clause 2, it would be interesting to hear why.

The Panama and Paradise papers have been mentioned a number of times. We know from them that the Odessa oil mafia controls a number of British Virgin Islands companies collectively known as the Rubicon Group. One of those individuals controlled a number of BVI companies without officially declaring them, and that group owns at least eight high-end London properties worth tens of millions of pounds. The secrecy afforded to those individuals, who have questionable sources of income, has allowed them to hide their identities and their wealth.

In the point I made earlier to the hon. Member for Hornsey and Wood Green (Catherine West), I was not criticising the Labour party in any way. I was trying to get across that after the tragedy of Grenfell and given the housing crisis, the rise in homelessness and the fact that these kinds of people own 40,000 properties across London—that is four fifths of my Livingston constituency—and more than 86,000 across England and Wales, we surely face a huge issue and a massive challenge. If we want to tackle the housing crisis, this is how to do it. The Government should be doing something about it, rather than standing by and saying that we already have the powers, when we clearly do not.

I commend the Government for new clause 6, which is an excellent and positive move. However, if the Prime Minister was really serious when she took office about governing for all the people of the UK, there is a great gulf still to cross. There are some serious and important amendments tabled by Members across the Chamber that the Government could put their support behind and in doing so make a real difference to our citizens.

Question put and agreed to.

New clause 4 accordingly read a Second time, and added to the Bill.

New Clause 5

Retained EU rights

‘(1) If and to the extent that anything in the European Union (Withdrawal) Act 2018 would, in the absence of this section, prevent any power within subsection (2) from being exercised so as to modify anything which is retained EU law by virtue of section 4 of that Act (saving for certain rights etc), it does not prevent that power from being so exercised.

(2) The following powers fall within this subsection—

(a) any power conferred by this Act, or by regulations under this Act, on a Minister of the Crown within the meaning of the Ministers of the Crown Act 1975 (however that power is expressed);

(b) any power conferred by regulations under Schedule 2 on a supervisory authority.

(3) In this section “modify” has the same meaning as in the European Union (Withdrawal) Act 2018.”—(Sir Alan Duncan.)

This new clause is consequential on government amendments to the European Union (Withdrawal) Bill, and makes clear that any restrictions in that Bill on the modification of retained EU law do not prevent powers under this Bill (for example, powers to impose an asset-freeze or immigration sanction) from being exercised in cases where their exercise will interfere with a retained right that a person would otherwise have under clause 4 of the European Union (Withdrawal) Bill.

Brought up, read the First and Second time, and added to the Bill.

New Clause 15

Enforcement: goods etc on ships

‘(1) The provision that may be made by virtue of section 17(2) (enforcement of prohibitions or requirements) includes provision as to the powers and duties of prescribed persons in relation to—

(a) British ships in foreign waters or international waters,

(b) ships without nationality in international waters, and

(c) foreign ships in international waters.

(2) Regulations may make provision by virtue of this section only for the purpose of enforcing relevant prohibitions or requirements.

(3) A prohibition or requirement is a “relevant prohibition or requirement” for the purposes of this section if it is—

(a) a prohibition or requirement specified by the regulations which is imposed by regulations for a purpose mentioned in any of paragraphs 2 to 7, 15(a), (b) or (c) or 16(a) of Schedule 1, or

(b) a prohibition or requirement imposed by a condition of a licence or direction issued by virtue of section 15 in relation to a prohibition or requirement mentioned in paragraph (a).

(4) The powers that may be conferred by virtue of this section include powers to—

(a) stop a ship;

(b) board a ship;

(c) require any person found on a ship boarded by virtue of this section to provide information or produce documents;

(d) inspect and copy such documents or information;

(e) stop any person found on such a ship and search that person for—

(i) prohibited goods, or

(ii) any thing that might be used to cause physical injury or damage to property or to endanger the safety of any ship;

(f) search a ship boarded by virtue of this section, or any thing found on such a ship (including cargo), for prohibited goods;

(g) seize goods found on a ship, in any thing found on a ship, or on any person found on a ship (but see subsection (8));

(h) for the purpose of exercising a power mentioned in paragraph (e), (f) or (g), require a ship to be taken to, and remain in, a port or anchorage in the United Kingdom or any other country willing to receive it.

(5) Regulations that confer a power mentioned in subsection (4)(a) to (f) or (h) must provide that a person may not exercise the power in relation to a ship unless the person has reasonable grounds to suspect that the ship is carrying prohibited goods (and the regulations need not require the person to have reasonable grounds to suspect that an offence is being or has been committed).

(6) Regulations that confer a power mentioned in subsection (4)(e)(i) or (f) must provide that the power may be exercised only to the extent reasonably required for the purpose of discovering prohibited goods.

(7) Regulations that confer a power mentioned in subsection (4)(e)(ii) on a person (“the officer”) may permit the search of a person only where the officer has reasonable grounds to believe that that person might use a thing in a way mentioned in subsection (4)(e)(ii).

(8) Regulations that confer a power mentioned in subsection (4)(g) on a person—

(a) must provide for the power to be exercisable on a ship only where that person is lawfully on the ship (whether in exercise of powers conferred by virtue of this section or otherwise), and

(b) may permit the seizure only of—

(i) goods which that person has reasonable grounds to suspect are prohibited goods, or

(ii) things within subsection (4)(e)(ii).

(9) Regulations that confer a power on a person by virtue of this section may authorise that person to use reasonable force, if necessary, in the exercise of the power.

(10) Regulations that confer a power by virtue of this section must provide that—

(a) the power may be exercised in relation to a British ship in foreign waters only with the authority of the Secretary of State, and

(b) in relation to foreign waters other than the sea and other waters within the seaward limits of the territorial sea adjacent to any relevant British possession, the Secretary of State may give authority only if the State in whose waters the power would be exercised consents to the exercise of the power.

(11) Regulations that confer a power by virtue of this section must provide that—

(a) the power may be exercised in relation to a foreign ship only with the authority of the Secretary of State, and

(b) the Secretary of State may give authority only if—

(i) the home state has requested the assistance of the United Kingdom for the purpose of enforcing relevant prohibitions or requirements,

(ii) the home state has authorised the United Kingdom to act for that purpose, or

(iii) the United Nations Convention on the Law of the Sea 1982 (Cmnd 8941) or a UN Security Council Resolution otherwise permits the exercise of the powers in relation to the ship.

(12) The reference in subsection (11) to the United Nations Convention on the Law of the Sea includes a reference to any modifications of that Convention agreed after the passing of this Act that have entered into force in relation to the United Kingdom.

(13) In this section—

“arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable);

“British ship” means a ship falling within paragraph (a), (c), (d) or (e) of section 7(12);

“foreign ship” means a ship which—

(a) is registered in a State other than the United Kingdom, or

(b) is not so registered but is entitled to fly the flag of a State other than the United Kingdom;

“foreign waters” means the sea and other waters within the seaward limits of the territorial sea adjacent to any relevant British possession or State other than the United Kingdom;

“goods” includes technology within the meaning of Schedule 1 (see paragraph 36 of that Schedule);

“home state”, in relation to a foreign ship, means—

(a) the State in which the ship is registered, or

(b) the State whose flag the ship is otherwise entitled to fly;

“international waters” means waters beyond the territorial sea of the United Kingdom or of any other State or relevant British possession;

“prohibited goods” means goods which have been, or are being, dealt with in contravention of a relevant prohibition or requirement (see subsection (3));

“regulations” means regulations under section 1;

“relevant British possession” has the same meaning as in section 7 (see subsection (14) of that section);

“ship” has the same meaning as in section 7 (see subsection (14) of that section);

“ship without nationality” means a ship which—

(a) is not registered in, or otherwise entitled to fly the flag of, any State or relevant British possession, or

(b) sails under the flags of two or more States or relevant British possessions, or under the flags of a State and relevant British possession, using them according to convenience.

(14) In the definition of “prohibited goods” in subsection (13), the reference to goods dealt with in contravention of a relevant prohibition or requirement includes a reference to a case where—

(a) arrangements relating to goods have been entered into that have not been fully implemented, and

(b) if those arrangements were to be fully implemented, the goods would be dealt with in contravention of that prohibition or requirement.”—(Sir Alan Duncan.)

This new clause allows regulations under section 1 to provide for powers to stop and search a ship outside the United Kingdom, and to seize goods or technology found on the ship. The powers are exercisable for the purpose of enforcing prohibitions in sanctions regulations relating to the goods or technology.

Brought up, read the First and Second time, and added to the Bill.

New Clause 16

Goods etc on ships: non-UK conduct

‘(1) Regulations may make provision conferring on prescribed persons powers exercisable—

(a) in relation to—

(i) British ships in foreign waters or international waters,

(ii) ships without nationality in international waters, and

(iii) foreign ships in international waters,

(b) for the purpose of—

(i) investigating the suspected carriage of relevant goods on such ships, or

(ii) preventing the continued carriage on such ships of goods suspected to be relevant goods.

(2) The powers that may be conferred by virtue of this section include powers to—

(a) stop a ship;

(b) board a ship;

(c) require any person found on a ship boarded by virtue of this section to provide information or produce documents;

(d) inspect and copy such documents or information;

(e) stop any person found on such a ship and search that person for—

(i) relevant goods, or

(ii) any thing that might be used to cause physical injury or damage to property or to endanger the safety of any ship;

(f) search a ship boarded by virtue of this section, or any thing found on such a ship (including cargo), for relevant goods;

(g) seize goods found on a ship, in any thing found on a ship, or on any person found on a ship (but see subsection (6));

(h) for the purpose of exercising a power mentioned in paragraph (e), (f) or (g), require a ship to be taken to, and remain in, a port or anchorage in the United Kingdom or any other country willing to receive it.

(3) Regulations that confer a power mentioned in subsection (2)(a) to (f) or (h) must provide that a person may not exercise the power in relation to a ship unless the person has reasonable grounds to suspect that the ship is carrying relevant goods.

(4) Regulations that confer a power mentioned in subsection (2)(e)(i) or (f) must provide that the power may be exercised only to the extent reasonably required for the purpose of discovering relevant goods.

(5) Regulations that confer a power mentioned in subsection (2)(e)(ii) on a person (“the officer”) may permit the search of a person only where the officer has reasonable grounds to believe that that person might use a thing in a way mentioned in subsection (2)(e)(ii).

(6) Regulations that confer a power mentioned in subsection (2)(g) on a person—

(a) must provide for the power to be exercisable on a ship only where that person is lawfully on the ship (whether in exercise of powers conferred by virtue of this section or otherwise), and

(b) may permit the seizure only of—

(i) goods which that person has reasonable grounds to suspect are relevant goods, or

(ii) things within subsection (2)(e)(ii).

(7) Regulations that confer a power on a person by virtue of this section may authorise that person to use reasonable force, if necessary, in the exercise of the power.

(8) Regulations that confer a power by virtue of this section must provide that—

(a) the power may be exercised in relation to a British ship in foreign waters only with the authority of the Secretary of State, and

(b) in relation to foreign waters other than the sea and other waters within the seaward limits of the territorial sea adjacent to any relevant British possession, the Secretary of State may give authority only if the State in whose waters the power would be exercised consents to the exercise of the power.

(9) Regulations that confer a power by virtue of this section must provide that—

(a) the power may be exercised in relation to a foreign ship only with the authority of the Secretary of State, and

(b) the Secretary of State may give authority only if—

(i) the home state has requested the assistance of the United Kingdom for a purpose mentioned in subsection (1)(b),

(ii) the home state has authorised the United Kingdom to act for such a purpose, or

(iii) the United Nations Convention on the Law of the Sea 1982 (Cmnd 8941) or a UN Security Council Resolution otherwise permits the exercise of the powers in relation to the ship.

(10) The reference in subsection (9) to the United Nations Convention on the Law of the Sea includes a reference to any modifications of that Convention agreed after the passing of this Act that have entered into force in relation to the United Kingdom.

(11) In this section—

“regulations” means regulations under section 1;

“relevant goods” means goods in relation to which relevant non-UK conduct is occurring or has occurred;

“relevant non-UK conduct” means conduct outside the United Kingdom by a person other than a United Kingdom person that would constitute a contravention of a relevant prohibition or requirement if the conduct had been—

(a) in the United Kingdom, or

(b) by a United Kingdom person;

“relevant prohibition or requirement” has the same meaning as in section (Enforcement: goods etc on ships) (see subsection (3) of that section);

“United Kingdom person” has the same meaning as in section 19 (see subsection (2) of that section).

(12) In the definition of “relevant non-UK conduct” in subsection (11), the reference to conduct that would constitute a contravention of a relevant prohibition or requirement if the conduct had been in the United Kingdom or by a United Kingdom person includes a reference to a case where—

(a) arrangements relating to goods have been entered into that have not been fully implemented, and

(b) if those arrangements were to be fully implemented (and if the conduct had been in the United Kingdom or by a United Kingdom person) the goods would be dealt with in contravention of that prohibition or requirement.

(13) In this section, the following expressions have the same meaning as in section (Enforcement: goods etc on ships)—

“arrangements”,

“British ship”,

“foreign ship”,

“foreign waters”,

“goods”,

“home state”,

“international waters”,

“relevant British possession”,

“ship”, and

“ship without nationality”.”—(Sir Alan Duncan.)

This new clause allows regulations under section 1 to provide for powers to stop and search a ship outside the United Kingdom, and to seize goods or technology found on the ship. The powers are exercisable for the purpose of seizing goods or technology where there has been conduct (or suspected conduct) which would be a contravention of a prohibition in sanctions regulations relating to the goods or technology, but for the fact that the conduct falls outside the territorial scope mentioned in Clause 19 of the Bill.

Brought up, read the First and Second time, and added to the Bill.

New Clause 17

Procedure for dealing with goods etc seized from ships

‘(1) The Secretary of State may by regulations make provision about the procedure to be followed in connection with goods seized under a power conferred by regulations under section 1 by virtue of section (Enforcement: goods etc on ships) or (Goods etc on ships: non-UK conduct).

(2) Regulations under this section relating to goods seized on suspicion of being prohibited goods or relevant goods may include provision—

(a) requiring prescribed persons to be notified of the seizure of the goods;

(b) requiring the Secretary of State to determine whether the seized goods were, at the time of their seizure, prohibited goods (where the goods were seized under a power conferred by virtue of section (Enforcement: goods etc on ships)) or relevant goods (where the goods were seized under a power conferred by virtue of section (Goods etc on ships: non-UK conduct));

(c) enabling the making of a claim by prescribed persons in relation to the seized goods;

(d) about the determination by a prescribed court of any such claim;

(e) about the publicity to be given to any such determination by a court;

(f) for and about the return of seized goods to prescribed persons before or after any such determination of a claim by a court;

(g) about the treatment of seized goods not so returned (including, in prescribed circumstances, their destruction or sale);

(h) for and about the payment of compensation by the Secretary of State following a determination by a court that the goods were not, at the time of their seizure, prohibited goods (where the goods were seized under a power conferred by virtue of section (Enforcement: goods etc on ships)) or relevant goods (where the goods were seized under a power conferred by virtue of section (Goods etc on ships: non-UK conduct)).

(3) In this section—

“goods” has the same meaning as in sections (Enforcement: goods etc on ships) and (Goods etc on ships: non-UK conduct) (see subsections (13) of those sections);

“prohibited goods” has the same meaning as in section (Enforcement: goods etc on ships) (see subsection (13) of that section);

“relevant goods” has the same meaning as in section (Goods etc on ships: non-UK conduct) (see subsection (11) of that section).”—(Sir Alan Duncan.)

This new clause provides a power for the Secretary of State to make regulations setting out how goods or technology seized from ships under the new clauses which would be inserted by NC15 and NC16 must be dealt with.

Brought up, read the First and Second time, and added to the Bill.

New Clause 8

Public Register of Beneficial Owners of Overseas Entities

“(1) The Secretary of State must, in addition to the provisions made under paragraph 6 of Schedule 2, create a public register of beneficial ownership information for companies and other legal entities registered outside of the UK that own or buy UK property, or bid for UK government contracts.

(2) The register must be implemented within 12 months of the day on which this Act is passed.

(3) For the purposes of this section “a register of beneficial ownership for companies and other legal entities registered outside of the UK” means a public register—

(a) which contains information about overseas entities and persons with significant control over them, and

(b) which in the opinion of the Secretary of State will assist in the prevention of money laundering.”—(Anneliese Dodds.)

This new clause would create a public register of beneficial ownership information for companies and other legal entities outside of the UK that own or buy UK property, or bid for UK government contracts, within 12 months.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

17:59

Division 144

Ayes: 296

---

Labour: 244
Scottish National Party: 34
Liberal Democrat: 10
Plaid Cymru: 3
Independent: 3
Green Party: 1

Noes: 314

---

Conservative: 303
Democratic Unionist Party: 10
Independent: 1

18:14

Proceedings interrupted (Programme Order, this day).

The Deputy Speaker put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).

New Clause 13

Due Diligence

‘(1) For the purposes of preventing money laundering, when a company is formed, any company formation agent providing formation services must ensure that the identity and business risk profile of all beneficial owners of the company are established in accordance with—

(a) the customer due diligence measures under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692),

(b) regulations made under section 44 of this Act, or

(c) the Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on anti-money laundering measures.

(2) For the purposes of subsection (1), Companies House is to be treated as a “company formation agent”.’—(Anneliese Dodds.)

This new clause would ensure that when a company is formed in the UK, the relevant formation services must identify the beneficial owners of the company. It will also treat Companies House as a “company formation agent”, ensuring that the data on the public register of beneficial ownership for companies is accurate.

Brought up.

Question put, That the clause be added to the Bill.

18:14

Division 145

Ayes: 298

---

Labour: 244
Scottish National Party: 34
Liberal Democrat: 10
Plaid Cymru: 4
Independent: 3
Green Party: 1

Noes: 313

---

Conservative: 302
Democratic Unionist Party: 10
Independent: 1

Clause 1

Power to make Sanctions Regulations

Amendment made: 23, page 2, line 38 after “to” insert

“17, (Enforcement: goods etc on ships), (Goods etc on ships: non-UK conduct) and”.—(John Glen.)

This amendment ensures that the reference in Clause 1(6) to clauses by virtue of which supplemental provision can be made by sanctions regulations includes NC15 and NC16.

Clause 19

Extra-territorial application

Amendment made: 24, page 18, line 34, at end insert—

‘( ) Nothing in this section limits the provision that may be made in regulations under section 1 by virtue of section (Enforcement: goods etc on ships) or (Goods etc on ships: non-UK conduct).”—(John Glen.)

This amendment makes it clear that Clause 19, which deals with the extra-territorial application of the Bill, does not limit the application of the new clauses which would be inserted by NC15 and NC16 (which provide for powers to be exercisable in relation to ships outside the United Kingdom).

Clause 47

Saving for prerogative powers

Amendment made: 25, page 35, line 39, at end insert—

‘( ) Nothing in this Act affects any power exercisable in relation to ships by virtue of the prerogative of the Crown.”—(John Glen.)

This amendment ensures that powers under the Bill which may be exercised in relation to ships, including those inserted by NC15 and NC16, would not limit powers which may be exercised in relation to ships by virtue of the royal prerogative.

Clause 48

Regulations: general

Amendment proposed: 21, page 36, line 8, leave out paragraph (a).—(Anneliese Dodds.)

This amendment would remove paragraph 2(a) from Clause 48, which enables the appropriate Minister to amend, repeal or revoke enactments for regulations under section 1 or 44 using Henry VIII powers.

Question put, That the amendment be made.

The House proceeded to a Division.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

I ask the Serjeant at Arms to investigate the delay in the No Lobby.

18:28

Division 146

Ayes: 295

---

Labour: 242
Scottish National Party: 34
Liberal Democrat: 10
Plaid Cymru: 4
Independent: 3
Green Party: 1

Noes: 313

---

Conservative: 302
Democratic Unionist Party: 10
Independent: 1

Schedule 1

Trade Sanctions

Amendment made: 26, page 51, line 14, at end insert—

“27A (1) For the purpose of the enforcement of any relevant prohibition or requirement, regulations under this paragraph may modify any provision of CEMA which—

(a) determines whether any thing is liable to forfeiture under CEMA by virtue of a contravention of the prohibition or requirement,

(b) provides for the treatment of any thing which is so liable by virtue of such a contravention, or

(c) confers any power exercisable in relation to a ship, aircraft or vehicle.

(2) In sub-paragraph (1) a “relevant prohibition or requirement” means a prohibition or requirement—

(a) imposed for a purpose mentioned in Part 1, and

(b) specified in the regulations under this paragraph.”—(Sir Alan Duncan.)

This amendment provides a power for regulations to modify provisions of the Customs and Excise Management Act 1979 that apply in relation to prohibitions contained in sanctions regulations.

Schedule 2

Money Laundering and Terrorist Financing Etc

Amendment made: 19, page 57, line 29, leave out paragraphs (a) and (b) and insert—

“(a) subject to any modifications the appropriate Minister making those regulations considers appropriate, make provision corresponding or similar to any provision of retained money laundering Regulations as those Regulations have effect immediately after being saved by section 2 or 3 of the European Union (Withdrawal) Act 2018;

(b) amend or revoke any retained money laundering Regulations.

‘(3A) In sub-paragraph (1) “retained money laundering Regulations” means—

(a) the Money Laundering Regulations 2017;

(b) Regulation (EU) 2015/847 of the European Parliament and of the Council of 20 May 2015 on information accompanying transfers of funds;

(c) any provision made under Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing by virtue of Article 290 or 291(2) of the Treaty on the Functioning of the European Union.”—(Sir Alan Duncan.)

This amendment enables money-laundering regulations under the Bill to make provision corresponding to, or amend or revoke, specified retained direct EU legislation relating to money laundering. It is consequential on government amendments to the European Union (Withdrawal) Bill which might otherwise prevent the regulations from modifying that retained legislation.

Third Reading

18:45

[Sir Alan Duncan]

I beg to move, That the Bill be now read the Third time.

It is a great pleasure to support the concluding stage of this Bill, which has been a long time in the making. Many might say it goes back many, many decades, because in this House we can all be proud that the United Kingdom is a country that fulfils its international obligations.

Ever since countries went to war with each other, we have been part of the institutions that try to create peace and try to introduce international order under a proper rules-based system. Inevitably, as the decades pass, the world changes and new measures are needed to tackle the problems the world faces.

We are founder members of the United Nations, and we sit on the Security Council, on which we fulfil our obligations dutifully. We have been a member of the European Union for 40 years, and our membership is now drawing peacefully to a close. That means we need to restructure the manner in which we fulfil our international duties, and to that end we need to pass legislation in this House that empowers us to do the many things we want to do.

[Mr Nigel Evans (Ribble Valley) (Con)]

Some people who want to diminish the vote of the British people to leave the European Union tend to say that standards will drop simply by our leaving the European Union. Does not the passage of this Bill prove how wrong people can be?

[Sir Alan Duncan]

I am grateful to my hon. Friend for raising that serious underlying benefit of the Bill.

At the moment, we implement various sanctions. Some we implement because, as members of the United Nations, we have to do so, and others we implement because, as members of the European Union, we do so collectively with the other 27 members. The power that currently allows us to implement sanctions derives from our membership of the European Union; it is not an autonomous legal power that we have sovereign to ourselves. This Bill is therefore needed to give to us, when we leave the European Union, the autonomous powers to have a proper, effective sanctions regime.

[Mr Mark Francois (Rayleigh and Wickford) (Con)]

This will allow us to work on sanctions, in accordance with our allies and with the wishes of the United Nations. The Minister will recall that one argument put in the debate on the referendum was that if we left the European Union, we would be without allies, friends and influence. Does the response to the appalling crime that took place in Salisbury, when 26 countries expelled more than 130 Russian diplomats between them, not show that when it came to it, Britain had friends, allies and influence, and that those allies stood with us when it really mattered?

[Sir Alan Duncan]

I am grateful to my right hon. Friend because he is absolutely right to say that in this dangerous and unstable world it is very important that there are moments when we act collectively. We do so through many forums: we are a member of the P5—a permanent member of the UN Security Council; we are a member of the G7, G20 and NATO; and, crucially, we are the only major western power to spend 0.7% of our national income on international development. We are therefore in a good position to retain our influence in the world, and we will do so partly by the powers we are taking under this Bill. It will allow us to continue to implement UN sanctions and to implement our own sanctions, no doubt often in concert with the remaining 27 members of the EU.

[John Howell (Henley) (Con)]

Does the Minister acknowledge, as I do, how important this Bill is in the context of dealing with terrorist money? Only last week, in the Council of Europe, we had a debate about trying to prevent the flow of funds that kept terrorist organisations, and Daesh in particular, afloat. This Bill will play a major role in helping towards that.

[Sir Alan Duncan]

As I have said, this Bill will not only ensure that we have the power to comply with our obligations under the UN charter but allow us to support our wider foreign policy and national security goals after we leave the EU. The powers and purposes in the Bill give us wide scope for applying sanctions wherever we think those powers need to be used in order to assist our foreign policy goals, and indeed for the wider decency and morality of the world of which we are a part. The Bill will enable us to keep up to date with anti-money laundering and counter-terrorist financing measures. It is an important piece of legislation, ensuring maximum continuity and certainty for individuals, businesses and international partners.

This Bill was one of the first pieces of legislation relating to the UK leaving the EU to come before Parliament. There were many uncertainties over how it would be received, but I feel it left the other place in good shape, mostly due to the brilliant stewardship of my ministerial colleague Lord Ahmad of Wimbledon. I am sure that, like me, this House would like to thank him for the way he steered this through the House of Lords, the Chamber in which it started.

I am grateful that Members of this House have similarly recognised the importance of this piece of legislation, and of the requirement to have the legal powers in place to impose, update and lift sanctions regulations, and change our anti-money laundering framework, once we leave the EU.

[Luke Graham]

Earlier this afternoon, this House accepted new clause 6, which puts new obligations on our overseas territories. Will my right hon. Friend assure the House and the overseas territories that we are not going to legislate and forget? Will he confirm that Members and the Government need to support our overseas territories to help them comply with the legislation we have passed this afternoon?

[Sir Alan Duncan]

I am very happy to say that very fulsomely, because during our debate on the decision to adopt new clause 6 I was at pains to say that we are not going to desert the overseas territories, or indeed the Crown dependencies. We are fully supportive of them. We are going to work very much with them and, I hope, with the grain of their own efforts. We are not, in any way, going to sell them down the river. May I say very publicly here, and to those in the overseas territories who may be able to see and take note of this, that we are and we remain full supporters of the overseas territories, that we will fulfil our obligations to them without reservation and that we are not going to dilute our efforts in doing so?

[Victoria Prentis (Banbury) (Con)]

The Minister is famed for his considerable charm and experience in overseas negotiations. Will he give the House some detail about how he is going to help the overseas territories to work with the new obligations?

[Sir Alan Duncan]

I will indeed.

We have had spirited discussions on many aspects of the Bill, both on the Floor of the House and in the Public Bill Committee. I thank in particular the Bill team, who have given up pretty much a year of their lives to work on every dot, comma and detail of the legislation. They have been dutiful, punctilious and hard-working. They have been burning the midnight oil and have put up with my occasional tetchiness—

[John Glen]

Really?

[Sir Alan Duncan]

Yes, really.

[Helen Goodman]

Surely not!

[Sir Alan Duncan]

I salute them for all their efforts.

On what my hon. Friend the Member for Banbury (Victoria Prentis) said about the overseas territories, I am grateful that, in response to the point of order made by my hon. and learned Friend the Member for Torridge and West Devon (Mr Cox), Mr Speaker made it absolutely clear that procedurally the Government’s proposed amendments were in order. The compromise amendment was tabled rather late in the day, but it was not out of order for being late. We fully recognise that the Speaker has the discretion to select or not to select an amendment for debate. We were obviously disappointed that the compromise amendment was not selected, but we respect Mr Speaker’s decision.

[Jo Swinson]

Will the Minister give way?

[Sir Alan Duncan]

I am very short of time. Does the shadow Minister wish to speak?

[Helen Goodman]

indicated assent.

[Sir Alan Duncan]

She does; I shall therefore not take an intervention so that I can leave a couple of minutes for her.

I thank my right hon. and hon. Friends on the Government Benches who would have supported the compromise amendment. I apologise if I marched them up to the top of the hill only for them to find that the hill had disappeared. I put on record my thanks to all who have helped with the Bill and, indeed, my thanks to the Opposition Front-Bench team for their co-operation on Magnitsky. Out of courtesy and shortness of time, with apologies for leaving her so little of it, I leave the last couple of minutes to the shadow Minister.

18:57

[Helen Goodman]

When the Minister began with his historical overview, I thought he was going to go back to Thucydides, who was of course the first person to write about sanctions; but no, his history was not quite so extensive.

The Opposition accept the need for this Bill in the post-Brexit environment. When it was first introduced in the other place, it had several major flaws. It presented a bundle of Henry VIII powers that gave the Government and the Executive too much power. An effective coalition of Labour and Cross-Bench peers improved the Bill substantially.

Another weakness of the Bill was that, although it was titled the Sanctions and Anti-Money Laundering Bill, only one of its 53 clauses was devoted to anti-money laundering. Through a series of measures, both those that the Government did not support and those that they were forced to support, we have inserted stronger anti-money laundering provisions.

When the Bill came to this House, it was clear that more needed to be done on the human rights front. We tabled Magnitsky amendments, and we are pleased that the House is now united on the need for a Magnitsky law in this country. The Paradise and Panama papers have shown how British overseas territories and Crown dependencies play a major role in aiding tax evasion and money laundering. Without the great investigative journalism, many of the cases to which we have referred might never have been uncovered. Under David Cameron’s Administration, the Government promised to extend the United Kingdom’s—

19:00

Debate interrupted (Programme Order, this day).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the Bill be now read the Third time.

Question agreed to.

Bill read the Third time and passed, with amendments.

Deferred Divisions

Motion made, and Question put forthwith (Standing Order No. 41A(3)),

That, at this day’s sitting, Standing Order No. 41 A (Deferred divisions) shall not apply to the Motion in the name of Mel Stride relating to Prisons (Interference with Wireless Telegraphy) Bill.—(Rory Stewart.)

Question agreed to.